Granite acquired Warren Paving and Papich Construction for a total of $710 million.
Warren Paving is an aggregate producer with vertically-integrated operations in the Mississippi River and Gulf Coast regions. The company operates one quarry, one sand and gravel operation, 11 aggregate yards, three asphalt plants and a fleet of 168 owned and leased barges.
The acquisition gives Granite more than 400 million tons of aggregate reserves and resources.
Papich Construction, meanwhile, specializes in infrastructure projects – including road, rail and highway construction, supplying both internal projects and third-party customers with aggregate and asphalt. The acquisition includes a gravel mine, two quarries and two asphalt plants.
“We are excited to welcome Warren Paving and Papich Construction,” says Kyle Larkin, president and CEO of Granite. “Their management teams have strong track records of success, and we look forward to combining our businesses. These acquisitions mark another significant step forward as we continue to grow our industry–leading, vertically-integrated business.
“With our strong cash generation and robust acquisition pipeline, I expect to continue to grow our home markets through bolt-on transactions and expansion into new markets,” Larkin adds.
Granite expects the additions of Warren Paving and Papich Construction to contribute $425 million in revenue each year, with an expected adjusted EBITDA (earnings before interest, tax, depreciation and amortization) margin of about 18 percent.
“These acquisitions are in line with our capital allocation strategy and reinforce our focus on driving sustainable, long-term value creation for our shareholders,” says Staci Woolsey, executive vice president and CFO at Granite. “Our cash generation and upsized credit facility allow us to continue to execute on high-quality M&A transactions while maintaining a prudent leverage ratio.”
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