CSR America,Inc. (CSRA) has further strengthened its position as the leading concretepipe and products manufacturer across 30 states in the US, with theacquisition of a large concrete pipe business in western Florida.
CSRA haspurchased certain assets of Southern Culvert, LC for US$35 million, includinga large concrete pipe plant in Tampa and a second plant in Jacksonville,Florida.Also included in theacquisition is a corrugated metal pipe fabrication business in Tampa and FortPierce, Florida.
The SouthernCulvert acquisition is part of the ongoing strategy of expanding throughvalue-creating, bolt-on acquisitions across the country.
CSR ManagingDirector Peter Kirby said the acquisition provides CSRA with a presence in thetwo major growth markets of Tampa and Jacksonville where it currently has nopresence in concrete pipe.
It willconfirm CSRA as the number one supplier of concrete pipe and product inFlorida - complementing CSRA’s existing operations and providing variousadministrative and other synergy benefits.CSRA will also gain upstream synergies through the supply of cementand aggregates to Southern Culvert.
“Theacquisition will also provide further opportunities for CSRA to benefit fromthe TEA-21 highway and road infrastructure spending program in Florida,through the supply of drainage pipe and drainage structures,” said Mr Kirby.
“TEA-21activity during the next four years is expected to be very strong in Floridafollowing an initial lag as the industry has been gearing up for the newhigher level of spending.Inaddition, road funding in Florida has been further enhanced recently byGovernor Bush’s US$6 Billion 10 year Mobility 2000 initiative.”
Theacquisition will also provide entry into the corrugated metal pipe (CMP)product market.Drainage contractorsuse a variety of products, including concrete pipe, CMP and plasticpipe.CMP competes well againstplastic pipe in Florida and is extensively used in irrigation, agriculturaland flood control applications where concrete pipe is not competitive or isnot specified.CMP’s cost and weightadvantages, compared to concrete pipe, enable it to be shipped over greaterdistances, and Southern Culvert’s production facilities provide coverage tothe entire state.
Theacquisition multiple is similar to previous concrete pipe and productspurchases by CSRA and the business is expected to deliver an earnings rateabove its cost of capital in the first year of operation.