Founded in 1948, Stavola is an aggregates-led and vertically integrated construction materials company primarily serving the New York-New Jersey Metropolitan Statistical Area (MSA) through its network of five hard rock natural aggregates quarries, twelve asphalt plants, and three recycled aggregates sites.
For the last twelve months ended June 30, 2024, Stavola generated revenues of US$283m and adjusted EBITDA of US$100m, representing a 35% adjusted EBITDA margin. The aggregates business contributed 56% to Stavola’s LTM Adjusted EBITDA. The structure of the transaction is expected to create tax benefits attributable to Arcosa with a net present value of approximately US$125m.
Commenting on the acquisition, Antonio Carrillo, Arcosa’s president and CEO, said: "Since becoming an independent public company in 2018, Arcosa has successfully executed against its long-term vision to grow in attractive markets and reduce the complexity and cyclicality of the overall business through strategic acquisitions and select divestitures. Over that time, we have expanded our Construction Products business both organically and inorganically, deploying approximately US$1.5bn on value enhancing acquisitions to date and increasing our aggregates presence in the top 50 MSAs.
“The acquisition of Stavola accelerates Arcosa’s strategic transformation by adding a premier aggregates-led platform in the nation’s largest MSA with favorable attributes from its exposure to lower volatility infrastructure-led end-markets. Pro forma for the transactions, Construction Products represents 65% of Arcosa’s LTM Adjusted EBITDA, and consolidated LTM Adjusted EBITDA Margin expands approximately 220 basis points. Stavola brings an experienced management team, a reputation for strong customer service, and a successful track record.”
Arcosa says the acquisition extends its construction products footprint into the nation’s largest MSA with a scaled and vertically integrated aggregates and FOB asphalt operation. Stavola operates in an attractive region with increased exposure to lower volatility, infrastructure-led end markets. Competitive advantages include a difficult to replicate leadership position underpinned by long-term customer relationships and an estimated 350 million tons of hard rock aggregates reserves commanding industry-leading profitability metrics.
Arcosa has obtained US$1.2bn of committed secured bridge loan financing in connection with the execution of the agreement to acquire Stavola, as well as a backstop to its existing US$600m revolving credit facility. Prior to the transaction close, the Company anticipates accessing the long-term debt capital markets for permanent financing with a mix of secured and unsecured debt that incorporates prepayment flexibility.
The acquisition has been unanimously approved by the company’s board of directors. Arcosa says it has obtained all necessary regulatory approvals for the acquisition of Stavola and the divestiture of the Arcosa steel components business. The company anticipates the acquisition will be completed in the fourth quarter and the divestiture is expected to close during the third quarter.
