Forterra, a manufacturer of water infrastructure pipe and products in the United States and Eastern Canada, is to sell the US concrete and steel pressure pipe assets of its Water Pipe and Products business segment to Thompson Pipe Group.
The transaction is subject to customary closing conditions and is expected to close in the third quarter of 2017.
Under the terms of the agreement, an affiliate of Thompson Pipe Group will acquire assets related to five Forterra manufacturing facilities and a fittings facility. Forterra will receive approximately USD23.2 million in cash, exclusive of fees and expenses, as well as assets relating to a drainage pipe and products manufacturing facility located in Conroe, Texas, which primarily serves the Houston market. The Company intends to use the net proceeds from the transaction to pay down debt. The transaction is expected to be immediately accretive to the Company’s earnings, margins and cash flows.
“After a review of strategic alternatives to enhance shareholder value, we are pleased to reach this agreement with Thompson Pipe Group,” says Jeff Bradley, CEO of Forterra. “We believe this transaction, which includes not only the divestiture of non-core assets, but also the acquisition of a drainage pipe and products facility in the large Houston market, will enable us to sharpen our focus on our core business and high-margin growth opportunities and more efficiently allocate capital to execute our strategic objectives.”
