Cumberland County-based Harsco Corp. today said it plans to sell its infrastructure division, which provides scaffolding, concrete forming equipment and other construction services, into a joint venture with private investment firm Clayton, Dubilier & Rice for $300 million.
When the deal closes, Harsco will receive a 29 percent equity stake in the new company, which will be formed by combining Harsco Infrastructure with Atlanta-based Brand Energy & Infrastructure Services Inc. CD&R is simultaneously acquiring that company from First Reserve, a Greenwich, Conn.-based investment firm with a focus on the energy sectors, according to Harsco.
The joint venture will have an enterprise value of about $2.5 billion and revenues of $3 billion with two-thirds of its business coming from services and products to the energy sectors, according to Harsco.
“This transaction is the first major step in the strategic transformation of Harsco,” President and CEO Patrick Decker said in a statement.
Harsco’s infrastructure division was, at one time, the Wormleysburg-based company’s largest business, but the global recession severely dented non-residential construction revenues from its largest markets in North America and Europe.
Since 2009, Harsco has been on a path of internal restructuring to shed non-core business segments, streamline its operations and reorganize executive management to put the company on the path to better financial footing.
Decker said this deal will continue toward those goals by:
- Strengthening Harsco’s financial profile with a $300 million cash infusion that can support opportunities in higher-return areas of the business.
- Positioning the company to invest in organic growth and acquire bolt-on companies in support of that.
- Reducing the complexity of Harsco’s portfolio.
- Allowing the company to expand in other ways.
The deal also includes about $1.7 billion in debt financing for the new company and has been approved by Harsco’s board of directors.