ITEQ to acquire Matrix Service and form leader in above ground storage tanks

Weekly Corporate Growth Report, Dec 22, 1997

The Deal: ITE has agreed to acquire Matrix in a transaction valued at $94 million, or $10/share. The deal calls for shareholders of Matrix to be able to tender a Matrix share for either $10 in cash or 0.83 of one ITEQ share. This is subject to the cash portion of the purchase not exceeding 50% nor being less than 30% of the total consideration. In conjunction with the merger ITEQ's board of directors will be expanded from nine to 10 people with the addition of one member designated by Matrix. The deal should be immediately accretive to earnings and the new company will have annual pre-tax cost savings expected to exceed $3 million. On the news, Matrix rose $1.25, or 15.3%, to $9.4375/ share, while ITEQ rose 62.5,, or 5.6%, to $11.75/share.

Discussion: Matrix Service Company is a leading domestic supplier of above ground storage tanks (ASTs), aftermarket tank products and specialized maintenance services. Its customer base includes refineries, chemical plants, terminal facilities, power generation, waste water plants, municipal water storage, refrigerated liquefied gas storage, thermal energy storage, industrial users of pressurized spheres, fertilizer storage, grain storage and food processing.

By acquiring Matrix, ITEQ will become the market leader in the tank maintenance and repair market As a result of the deal, ITEQ will enter the elevated water tank market where future growth prospects are excellent through funding available under the recently enacted Safe Drinking Water Act Matrix will complement ITEQ's Storage Systems Group through cross-selling opportunities, and will complement ITEQ's Process Equipment Group as well.

Copyright Quality Services Company Dec 22, 1997
Provided by ProQuest Information and Learning Company. All rights Reserved
 

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