Arcosa prices $600 million senior notes for acquisition

DALLAS - Infrastructure products provider Arcosa , Inc. (NYSE: NYSE:ACA) has announced the pricing of a private offering of $600 million in senior notes with a 6.875% interest rate, due in 2032. This move is part of the funding strategy for its $1.2 billion acquisition of the construction materials business from Stavola Holding Corporation, a transaction anticipated to close by August 26, 2024.

The senior notes are unsecured obligations of Arcosa, guaranteed by its domestic subsidiaries that are also guarantors under its senior credit facility. They are subject to a mandatory redemption clause if the acquisition is not finalized within the timeframe stipulated in the indenture.

Arcosa plans to use the proceeds from the notes, along with expected borrowings under a Term Loan B Facility due 2031, to finance the acquisition. Any remaining funds will be directed towards repaying amounts outstanding under the company's revolving credit facility.

The notes and their guarantees are being offered to qualified institutional buyers in the United States and to certain non-U.S. persons in offshore transactions, in accordance with Rule 144A and Regulation S under the Securities Act of 1933. These securities have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the U.S. without registration or an applicable exemption from the registration requirements.

Headquartered in Dallas, Texas, Arcosa operates in the construction, engineered structures, and transportation markets, reporting financial results across three principal business segments.

This press release, which contains forward-looking statements, does not constitute an offer to sell or a solicitation of an offer to buy any securities. The offering of the notes is made solely by means of a private offering memorandum.

The information presented in this article is based on a press release statement.

In other recent news, Arcosa Inc. has reported strong financial outcomes for the second quarter of 2024, with record quarterly revenues and adjusted EBITDA increasing by 14% and 31% respectively. The company's strategic moves, such as the acquisition of Stavola for $1.2 billion, are expected to strengthen its market position and optimize its portfolio for future growth. Arcosa has also announced its intention to issue $600 million in senior notes due in 2032, partially funding the Stavola acquisition. The offering is contingent on market conditions and other factors.

In addition, Arcosa has divested its steel components business to Stellex Capital Management, a move expected to enhance the growth of the acquired companies. Stellex has appointed David Meyer as CEO of the combined entity, with the goal of maintaining high-quality service for existing customers while seeking new growth avenues. These recent developments underline Arcosa's strategic focus on deleveraging, organic growth, and efficiency improvements.

InvestingPro Insights

As Arcosa, Inc. (NYSE: ACA) gears up for its strategic acquisition of Stavola Holding Corporation's construction materials business, the company's financial health and market performance are key factors for investors to consider. According to InvestingPro data, Arcosa boasts a market capitalization of $3.97 billion and a Price/Earnings (P/E) ratio of 26.74, reflecting investor sentiment about the company's earnings potential. The company has shown resilience with a revenue growth of 8.89% over the last twelve months as of Q2 2024, indicating its ability to expand its business operations effectively.

InvestingPro Tips highlight several strengths in Arcosa's financial strategy and performance. Analysts have recognized the company's ability to maintain liquidity, as its liquid assets exceed short-term obligations. Moreover, Arcosa operates with a moderate level of debt, which may provide it with the flexibility to manage its finances amidst the acquisition without overleveraging itself. It is also worth noting that analysts predict Arcosa will be profitable this year, building on its track record of profitability over the last twelve months.

For investors looking for long-term performance indicators, Arcosa has demonstrated a strong return over the last five years. This trend aligns with the company's recent strategic moves and may instill confidence in its ability to deliver value to shareholders in the future. Those interested in a deeper analysis can find additional insights among the 6 InvestingPro Tips available on the platform, which can be accessed at https://www.investing.com/pro/ACA.

With an upcoming earnings date on October 30, 2024, and a fair value estimation by analysts at $108, compared to the InvestingPro fair value of $81.46, the market will be closely watching Arcosa's performance as it integrates the new acquisition and strives to meet its financial objectives.

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