EMCOR Group acquires USM

NORWALK, Conn. – EMCOR Group (NYSE: EME) announced that it has entered into a definitive agreement to acquire USM Services Holdings (USM), a provider of facilities maintenance solutions in North America, from Transfield Services Limited (ASE: TSE). The acquisition is an all-cash transaction for $255 million, representing $225 million for the base USM business plus $30 million for the net present value of a USM tax benefit.

USM was ranked 18th on Lawn & Landscape’s 2010 Top 100 list. The transaction is expected to close towards the end of June, subject to customary closing conditions. EMCOR will utilize available cash to finance the acquisition. 
 
Headquartered in Norristown, Pa., and with annual revenues of approximately $375 million, USM is a provider of essential facilities maintenance services, including interior and exterior services and electrical, mechanical and plumbing services, to national and regional commercial customers that typically maintain more than 100 sites across wide geographic areas. With its highly-developed proprietary network of more than 11,000 service partners, USM delivers consistent facilities maintenance services across a nationwide footprint for approximately 150 customers in more than 75,000 locations in all 50 states and Canada. 

“We are excited to be acquiring USM, which further strengthens EMCOR’s market leading position in facilities and maintenance services,” said Tony Guzzi, president and CEO of EMCOR. “Our two businesses are highly complementary to each other, as USM is a leader in predictive, scheduled interior and exterior maintenance services, while EMCOR leads the market in providing site-based and mechanical services and other electrical and mechanical trades services. In an environment in which customers are increasingly looking to centralize their outsourcing with a quality provider, we will together offer a compelling, comprehensive value proposition that is unmatched in the marketplace.”

“We look forward to joining the EMCOR team,” said Ivan Dubow, COO of USM. “Both companies are industry leaders with strong commitments to customer relationships, margin, cash generation and employee development. These shared values speak to a promising future, and we look forward to working together.”

For the balance of 2011, the acquisition of USM is expected to add approximately $160 million in revenues and be slightly accretive to EMCOR’s diluted earnings per share, after transaction expenses of approximately $6 million. For 2012 and annual periods thereafter, USM is expected to be accretive to EMCOR’s diluted earnings per share and generate operating income margin, excluding intangible amortization expenses, in excess of EMCOR’s historical peak operating income margins.  
 
Operating efficiencies are expected to be generated from the combination of USM and EMCOR’s facilities businesses, resulting in targeted annualized expense reductions of approximately $5 - $6 million over the next two years.