Quanta to Buy InfraSource in $1.26 Billion Deal

Quanta Services , a builder of energy and telecommunications networks, said on Monday it would buy InfraSource Services for $1.26 billion in order to expand its services and increase its national presence.

The all-stock deal calls for the exchange of 1.223 shares of Houston-based Quanta's common stock for each outstanding common share of InfraSource. That is about $30.13 per share, a 17.4% premium over the closing price of InfraSource stock on March 16, according to the companies.

InfraSource shares surged on the New York Stock Exchange. Quanta stock also gained .

Upon closing, Quanta shareholders are to own about 75% of the combined company and InfraSource stockholders about 25%. The transaction is expected to add to Quanta's earnings per share in 2008.

The combined company will have about 16,000 employees.

Quanta Chief Executive John Colson told investors on a conference call that Quanta would like to close the deal early in the third quarter and does not foresee many problems in getting regulatory approval.

Quanta said it saw "meaningful cost and operational synergy opportunities" as a result of the acquisition of Media, Pennsylvania-based InfraSource.

Most of the synergies would come from rationalizing costs, executives said during a conference call.

"Right now, I don't anticipate spinning anything off," Colson said, noting that the two companies had remarkably smaller overlap than he would have thought.

Based on 2006 results, the combined company would have revenue of more than $3.1 billion and adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of more than $270 million, Quanta and InfraSource said.

Contact U.S. News


    Get the best of CNBC in your inbox

    › Learn More

Don't Miss

U.S. Video

  • CNBC consumer reporter, Kelli Grant, offers tips on how to spot red flags which may indicate an online fake.

  • Gordon Chang, "The Coming Collapse of China," author, shares his thoughts on the risks associated with investing in Alibaba's IPO.

  • The man can mesmerize an audience, says John Rutledge, Safanad chief investment strategist, sharing his thoughts on the Chinese business leader and discussing his concerns about investing in Alibaba's IPO. Don't buy something you don't understand, Rutledge warns investors.