CANDIAC: Stella-Jones Inc. (TSX: SJ) announced Wednesday it has entered into a definitive agreement to acquire Locweld Inc., a leading manufacturer of lattice transmission towers and steel poles. The acquisition is expected to close later in the day.
Locweld, which has been in operation for more than 75 years, employs approximately 220 people and serves customers in Canada and the United States from its 220,000-square-foot facility in Quebec. The company has built a strong reputation for quality and service under the leadership of an experienced management team.
“This acquisition is a step-change that enables Stella-Jones to establish a presence in the approximately five-billion-dollar steel transmission structure market, complementing our current utility poles business and offering new growth opportunities,” said Eric Vachon, president and CEO of Stella-Jones.
“With this strategic move, we are well positioned to better serve our customers and gain invaluable experience as we work to continually develop our reach.”
Michael Cyr, Locweld’s CEO, highlighted the benefits of the deal for both parties. “For almost 40 years, the Cyr family has led Locweld, and we are excited to have identified a strategic buyer in Stella-Jones,” he said.
“Locweld will gain from the strength of a larger organization that views the transmission structure industry as a cornerstone of its future growth, while our team will bring industry expertise and know-how to continue delivering exceptional value to customers.”
The acquisition, valued at $58 million on a cash-free, debt-free basis, includes an additional performance-based consideration of up to $7 million, contingent upon meeting specific financial and operational targets. Stella-Jones also plans to invest approximately $15 million in capital expenditures to enhance Locweld’s production and operational efficiencies.
Locweld reported approximately $55 million in sales for the fiscal year ending Sept. 30, 2024. Cyr will step down from his role following the acquisition, while key members of the management team will remain in place to support the business. Stella-Jones will finance the deal through its existing revolving credit facilities.