Bird to buy Stuart Olson for $96M
Two major contractors are merging.
Bird Construction announced on July 29 that it has entered into an agreement to acquire Calgary’s Stuart Olson for $96.5 million. The merger creates a combined workforce of 5,000 people, a backlog of projects worth more than $3 billion, and a pending backlog of a further $1 billion. These include the $275-million York University Markham Centre Campus announced on July 24 (pictured).
"The combination of our two businesses will create a company with substantially increased breadth and scale, diversified across services, end-markets and geographies," said Bird president and CEO Terrance L. McKibbon. "In addition to combining two strong, experienced workforces, customers will benefit from a dynamic, integrated suite of construction services. The additional scale, leading technology platform and comprehensive service solution will position the company to deliver sustainable value and continuing dividends to shareholders.”
Under the terms of the agreement, Bird will pay $30 million in cash and $66.5 million in common shares—most of which will be paid to Stuart Olson’s secured creditors.
Stuart Olson’s lenders will receive $70 million under the terms of the deal, while its debenture holders will collect $22.5 million. That leaves just $4 million to be divided among the company’s shareholders.
Stuart Olson has faced financial hardship in the past few years. A large portion of the company’s industrial group revenues have been tied to Alberta’s oil and gas sector. As energy firms cut back on spending, the company’s revenue base suffered.
In April, Stuart Olson retained advisors CIBC Capital Markets Inc. and TD Securities Inc. to help with a strategic sales process.
"After a period of extensive review and consideration of the strategic and financial alternatives reasonably available to Stuart Olson, the board determined that this transaction is in the best interests of Stuart Olson and its shareholders given the current and go forward balance sheet and leverage metrics challenges facing Stuart Olson," said Stuart Olson president and CEO David LeMay. "We and Bird have a similar history with roots dating back over 100 years in Canada, a shared strategic focus on growth in our respective businesses and strong cultural alignment throughout our organizations. In the face of the challenges currently being experienced by Stuart Olson, including operating under risks related to the COVID-19 pandemic, and the significant economic changes in Canada, it's a move that renews opportunities for our people, expands new services to our clients and is expected to create long-term value for all our stakeholders."
While both companies’ board of directors approved the sale unanimously, the transaction remains subject to approval by the Court of Queen's Bench of Alberta, the Competition Bureau, the shareholders, secured bank lenders and unsecured convertible debenture holders of Stuart Olson.
The agreement is expected to be finalized in the fourth quarter of this year.