– Expands CMC’s penetration in engineered construction ground reinforcement
– Creates significant global growth platform, complementing concrete reinforcement markets and customer segments where CMC has deep, existing relationships
– Benefits from secular infrastructure spending and environmental trends, superior eco-friendly performance compared to conventional ground reinforcement and soil stabilization methods
– Earnings accretive in first year, with attractive through-the-cycle returns projected
– $550 million transaction value
IRVING, Texas, Dec. 7, 2021 — Commercial Metals Company (NYSE: CMC) (“CMC”) today announced it has entered into a definitive agreement to acquire TAC Acquisition Corp. (“Tensar”), a portfolio company of Castle Harlan Inc.’s fund, Castle Harlan Partners V, L.P., and a leading global provider of engineered solutions for subgrade reinforcement and soil stabilization used in road, infrastructure and commercial construction projects. The transaction, valued at $550 million, is subject to customary purchase price adjustments and is not contingent on any financing arrangements. The purchase price represents a multiple of 8.4x Tensar’s expected 2021 EBITDA, inclusive of clearly executable cost synergies of approximately $5 million.
“This compelling acquisition advances CMC’s strategy to expand our leadership in construction reinforcement, with value-added products that complement our existing offering,” said Barbara R. Smith, Chairman of the Board, President and Chief Executive Officer of Commercial Metals. “Tensar will create a powerful platform for incremental growth into complementary high-margin engineered products that target CMC’s largest core market, construction, serving end-use markets and customer segments where we have strong and existing relationships. Once complete, this transaction will strengthen CMC’s position as a global reinforcement solutions provider, capable of addressing multiple early phases of commercial and infrastructure construction, including subgrade, foundation, and structures.”
“Our core strengths and end markets closely align,” Smith noted. “Customer satisfaction is at the center of our operating models, and both organizations are recognized in their markets for delivering value-added solutions in early-stage construction. Both companies produce significant value through innovations – including processes and products – and emphasize operational excellence to maximize financial performance.”
“Additionally, CMC and Tensar are at the forefront of environmental sustainability, with Tensar’s subgrade reinforcement and soil stabilization products able to reduce construction project carbon footprint by up to 30%, compared to conventional methods. We are also both well-positioned to benefit from long-terms trends favoring infrastructure spending,” Smith added.
Tensar is a leading global provider of innovative subgrade soil reinforcement solutions, selling into more than 80 national markets through its two major product lines: Tensar® geogrids and Geopier® foundation systems. Geogrids are polymer-based products used for ground stabilization, soil reinforcement, and asphalt optimization in construction applications including roadways, public infrastructure, and industrial facilities. Tensar originated geogrid technology, which reduces aggregate consumption, thereby decreasing construction time, expense, and the project owner’s cost of lifetime maintenance. The company also has a large portfolio of proprietary products.
Geopier systems are ground improvement solutions that increase the load-bearing characteristics of ground structures and working surfaces, and can be applied in soil types and construction situations in which traditional support methods are impractical or would make a project infeasible. Tensar holds over 140 global patents related to Geopier technology, and operates this business segment on a licensing model, designing and engineering a customized Geopier solution that is licensed to contractors for each project.
“Today’s announcement is another exciting step in CMC’s strategic growth plan that will further enhance our organization,” said Ms. Smith. “We look forward to welcoming Tensar’s 650 worldwide employees to the CMC family.”
The transaction has been approved by the boards of directors of both Commercial Metals Company and TAC Acquisition Corp. The closing of the transaction is expected to occur in a timely manner following customary regulatory review and subject to customary closing conditions.
Rockefeller Financial LLC served as the exclusive financial advisor and Kirkland & Ellis LLP served as legal counsel to CMC for this transaction.
Investor Conference Call and Webcast
In conjunction with this announcement, Commercial Metals Company (NYSE: CMC) invites you to listen to its conference call that will be broadcast live over the internet today, December 7, 2021, at 11:00 a.m. Eastern Time (10:00 a.m. Central) with Barbara R. Smith, Chairman of the Board of Directors, President, and Chief Executive Officer, and Paul Lawrence, Vice President and Chief Financial Officer.
The call is accessible via our website at www.cmc.com. In the event you are unable to listen to the live broadcast, the call will be archived and available for replay on our website on the next business day.
