Insituform Technologies, Inc., has entered into a definitive agreement to acquire Kinsel Industries, Inc., a Houston, Texas, company, with an expected closing date of February 28, 2001 for $80 million, of which $15.3 million is in cash and notes and the balance in Insituform's stock. The closing is subject to normal conditions.
Kinsel, founded in 1976, is primarily involved in water and sewer markets and other contracting businesses. Their water/sewer business includes pipebursting, micro-tunneling, other pipe rehabilitation and construction, and erection of water and sewer treatment plants. Kinsel's other contracting business is involved with highway, bridge and airport construction. For the year ended December 31, 2000, Kinsel is expected to report revenues of approximately $100 million.
Insituform intends to operate Kinsel as two divisions: water/sewer and other construction. For 2000, revenue in these two divisions was approximately equal. While both divisions are strong, the water/sewer segment is expected to grow at a rate comparable to or higher than Insituform's growth rate. The forecasted growth for the water/sewer segment is primarily in pipebursting and other trenchless pipe rehabilitation methods. During the fourth quarter of 2000, a Kinsel joint venture (in which it is a 50% partner) was awarded a five-year rehabilitation contract for up to $380 million in total. This contract, which is primarily pipebursting, was awarded by Jacksonville (Florida) Electric Authority. The other construction business, although valuable, does not fit the Insituform strategy and is expected to be divested in the future.
Anthony W. (Tony) Hooper, Chairman of the Board, President and Chief Executive Officer of Insituform, stated that, "As we expanded our presence in major markets, we felt the time had come to offer a broader range of trenchless pipe rehabilitation capabilities to our clients by adding other specialized trenchless methods. Kinsel is well established in pipe rehabilitation and has had major success in obtaining pipebursting contracts in particular. It adds to the breadth of solutions offered to our existing customers and thus is an excellent complement to both our rehabilitation and tunneling business segments. Our combined company should be better able to satisfy the full range of customer needs than we could have as separate companies. We expect the Kinsel acquisition will be accretive to Insituform's earnings when consummated."