Bird Construction to buy Stuart Olson in $96.5M deal
Two major Canadian contractors are joining forces.
Amid the tough operating environment brought on by the COVID-19 pandemic and the prolonged slowdown in the Canadian oil and gas industry, Calgary-based Stuart Olson Inc. has agreed to a $96.5 million takeover offer from Bird Construction Inc.
“The combination of our two businesses will create a company with substantially increased breadth and scale, diversified across services, end-markets and geographies,” Terrance McKibbon, president and CEO of Bird, said in a release.
With a workforce of approximately 5,000 and a backlog of about $3 billion, Mississauga, Ont.-based Bird said the combined company will create a platform for growth. It added the business will be well positioned to benefit from infrastructure stimulus spending as Canada works to recover from the pandemic.
The cash and stock deal totals $96.5 million. Bird will pay $30 million cash and $66.5 million in common shares — most of which will go to satisfying Stuart Olson’s lenders. Under the agreement, the company’s lenders and debenture holders will receive $70 million and $22.5 million, respectively, leaving approximately $4 million to be distributed among shareholders.
David LeMay, the president and CEO of Stuart Olson, said the decision follows a period of “extensive” review and consideration.
“We and Bird have a similar history with roots dating back over 100 years in Canada, a shared strategic focus on growth in our respective businesses and strong cultural alignment throughout our organizations,” he said in a release. “In the face of the challenges currently being experienced by Stuart Olson, including operating under risks related to the COVID-19 pandemic, and the significant economic changes in Canada, it’s a move that renews opportunities for our people, expands new services to our clients and is expected to create long-term value for all our stakeholders.”
With considerable revenues from its Industrial Group tied to Canada’s oil and gas sector, Stuart Olson, known as the Churchill Corporation until 2014, has faced increased pressure as energy firms curtailed spending in recent years. The deal was set in motion in early April, when, given increased financial and operational pressures, the company retained financial advisors to assist with a strategic sales process.
Both company boards have unanimously signed off on the agreement. It still requires the approval of Stuart Olson shareholders and approval from the Alberta Court of Queen’s Bench, among other customary closing conditions.
Bird and Stuart Olson expect to finalize the agreement in the fourth quarter of 2020.