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WATSONVILLE, Calif. - Granite Construction Inc. (NYSE:GVA), a $4.1 billion construction company with a "GOOD" financial health rating according to InvestingPro, has completed two acquisitions for a combined $710 million that strengthen its vertically-integrated operations in the Southeast and California markets, the company announced Wednesday.
The acquisitions of Warren Paving and Papich Construction are expected to contribute approximately $425 million in annual revenue with an adjusted EBITDA margin of about 18%, according to a company press release statement. This addition would significantly complement Granite’s existing operations, which generated $4.03 billion in revenue over the last twelve months with an EBITDA of $330.2 million.
Warren Paving, a leading aggregates producer in the Mississippi River and Gulf Coast regions, operates a network including one quarry, one sand and gravel operation, 11 aggregate yards, three asphalt plants, and 168 owned and leased barges. The acquisition adds over 400 million tons of aggregate reserves and resources to Granite’s portfolio.
Papich Construction, which specializes in infrastructure projects in California, brings a gravel mine, two quarries, and two asphalt plants to Granite’s operations.
Together, the acquisitions increase Granite’s aggregate reserves by approximately 30% and annual aggregate production by about 27% with the addition of over 5 million tons.
"These acquisitions mark another significant step forward as we continue to grow our industry-leading, vertically-integrated business," said Kyle Larkin, Granite’s President and Chief Executive Officer.
The transactions were financed through a new 5-year $600 million term loan, $100 million of cash on hand, and $10 million drawn from an upsized revolver of $600 million.
Granite will provide further details on these transactions and revised 2025 guidance during its earnings call scheduled for Thursday, August 7.
Barclays served as exclusive financial advisor to Granite on the Warren Paving acquisition, while A&O Shearman provided legal advice for both acquisitions.
In other recent news, Granite has secured significant contracts, highlighting its active role in various infrastructure projects. The company has been awarded two work packages totaling $230 million for the Garnet Valley Wastewater System project in Nevada, as part of a broader $900 million initiative by the Southern Nevada Water Authority. Additionally, Granite’s joint venture with Obayashi Corporation has received a $158 million task order from the Naval Facilities Engineering Command for the construction of missile defense infrastructure in Guam. In Utah, Granite has been awarded a $17 million contract by the Utah Department of Transportation for a bridge replacement project in Riverdale. Furthermore, the company secured a $111 million contract for a major infrastructure rehabilitation project in Salt Lake City, also commissioned by the Utah Department of Transportation.
In corporate developments, Granite Construction announced the retirement of James Radich as Executive Vice President and Chief Operating Officer. The company has entered into a severance agreement with Mr. Radich, who will receive payment for accrued salary and remain eligible for vested benefits under the company’s incentive plans. These recent developments underscore Granite’s continued engagement in large-scale projects and strategic management changes.
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