Italian heavyweight Salini Impregilo plans to target the vast infrastructure market of the US by acquiring the established family highway builder and asphalt maker, Lane Industries, for $406m.
Founded in 1890, $1bn-plus-turnover Lane has 4,600 employees and specialises in heavy civil construction and products in transport, infrastructure and energy.
We will have an owner that truly understands our industry and wants to grow the business– Robert E. Alger, Lane Industries president
It is working on some of the biggest projects in the US, including the $2.3bn "I-4 Ultimate" highway makeover in Florida, in which it has a 30% stake.
Salini already operates in the US with its subsidiary, Healy, but says the Lane acquisition will help it secure more of the US infrastructure market, which it believes will expand faster than GDP due to pent-up demand and years of under-investment.
With Lane on board Salini hopes the US will come to provide 21% of group revenues.
"It will enable the Group to create a powerful platform to seize opportunities in a market where having a local presence and a local team of managers it is must to succeed," Salini said in a statement yesterday.
The acquisition for approximately $406m is expected to close in January 2016 subject to the approval of Lane’s shareholders and regulatory approvals, Salini said, adding that the money would come from available cash, credit lines and from new financing it expects to find by the close of the deal.
"With Lane, we bring our group to a new, more ambitious level as we reach a truly global scale while preserving a sound financial structure," said Pietro Salini, chief executive of Salini Impregilo.
He added: "We will have a leadership position in the US, in Europe as well as in high-growth regions."
For Lane, Robert E. Alger, president and chief executive, said the new owner would remove constraints on growth.
"We will have an owner that truly understands our industry and wants to grow the business," he said. "With the complementary skill-set and presence of Salini Impregilo, Lane will be able to grow and offer opportunities to our employees that we would not have been able to do under our current structure."
Salini Impregilo broke into the global super-contractor league when Salini acquired majority ownership of its larger Italian rival, Impregilo, during 2013.
Yesterday it also announced revenues of €3.4bn in the first nine months of 2015, up 8.4% on the same period last year.
Photograph: Salini believes the US infrastructure market will expand faster than GDP due to pent-up demand and years of under-investment (Volvo Construction Equipment)