MasTec (MTZ) to Acquire Henkels & McCoy

MasTec, Inc. (NYSE: MTZ) today announced that it has entered into a definitive agreement to acquire Henkels & McCoy Group Inc. (Henkels), one of the largest U.S. private electrical power transmission and distribution utility services firm and the 14th largest U.S. specialty contractor according to the recent 2021 Engineering News-Record ranking. Founded in 1923, Henkels has been in operation for over 98 years, with approximately $1.5 billion in fiscal 2021 revenue primarily with long tenured relationships across a diverse blue chip customer base, with expansive geographic operations across the United States.

Jose Mas, MasTec's Chief Executive Officer, commented, "First of all, we look forward to welcoming almost 5,100 Henkels team members to the MasTec family. Henkels' operating excellence is well known in the industry, and together with MasTec, our expanded resources and footprint will help serve expected significant growth demand in the utility sector. Culture in a services operation is critical, and both Henkels and MasTec have proud traditions as family businesses, with a strong focus on safety and customer service. We believe that Henkels' expertise, scale and capacity, when combined with our existing operations, will provide a compelling suite of service offerings to support our customers' needs as they work to transition to renewable energy generation, modernize power grid systems and reduce carbon emissions."

Rod Henkels, Chairman and Chief Executive Officer of Henkels, commented, "As a third generation, family-owned company, we carefully evaluated multiple alternatives for our operations. Our choice of MasTec was based on the strong cultural fit for both our loyal employees and long-term customers. In addition, we believe that MasTec provides significant strategic growth opportunities and, as evidence of our strong belief in the merits of this combination, my brother Paul and I have requested, and will receive, a significant portion of the proceeds of the transaction in MasTec common stock."

Total transaction consideration will be $600 million, with approximately $420 million in cash (including the repayment of Henkels' debt) plus approximately 2 million shares of MasTec common stock, subject to customary purchase price adjustments. Cash will be provided by MasTec's cash on hand as well as borrowing under its existing unsecured credit facility. MasTec anticipates that post-acquisition leverage metrics will remain comfortably within its target range with ample liquidity.

The transaction supports MasTec's long-term strategy to expand in the fast-growing electric utility services market with incremental recurring master service agreement revenue. While it is expected that significant revenue and operating margin opportunities will materialize from this combination, none of these potential opportunities are included in the current expectation that Henkels' 2022 results will approximate its fiscal 2021 results at approximately $1.5 billion in revenue and $70 million in adjusted EBITDA1. Both actual fiscal 2021 and expected post-acquisition 2022 results reflect impacts of underperforming communications and pipeline services operations, which are anticipated to improve over time.

The transaction has been unanimously approved by the Board of Directors of both MasTec and Henkels, as well as Henkels' shareholders, and is expected to close by year end 2021, subject to receiving required Hart-Scott-Rodino approvals and the satisfaction of other customary closing conditions.

Holland & Knight LLP acted as legal counsel to MasTec. Houlihan Lokey served as exclusive financial advisor, and Sidley Austin LLP served as legal counsel, to Henkels.

Conference Call Information:

In conjunction with this announcement, MasTec has scheduled a conference call for this morning, December 20, 2021, at 9:00 a.m. Eastern Time, which will also be broadcast live over the Internet. MasTec will utilize a slide presentation to accompany its prepared remarks, which will be viewable through the webcast and will also be available in the "Events and Presentations" area of the "Investors" section of MasTec's website prior to the start of the call. To participate in the call, dial (856) 344-9290 or (800) 458-4121 at least 10 minutes before the conference call begins and ask for the MasTec call using conference code 7713001. You may also visit the Investor Relations section of the MasTec website at https://investors.mastec.com/events-presentations to access the Internet broadcast. For those who cannot participate live, a recording will be available on the company's website for approximately 30 days by dialing (719) 457-0820 and referencing the same conference code.

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