Innovate Corp. (NYSE: VATE) has agreed to sell DBM Global, Inc. to IES Holdings, Inc. (Nasdaq: IESC) for $650 million in a combination of cash and stock, according to a company statement.

Innovate currently owns approximately 91.21% of DBM Global's outstanding common stock. Under the terms of the deal, IES will acquire 100% of DBM Global's shares, with Innovate receiving roughly $453 million in cash and 215,487 shares of IES common stock valued at $140 million as of the agreement's signing date. IES will also pay Innovate $35 million in cash related to a joint tax election under Section 338 of the Internal Revenue Code.

The IES shares issued to Innovate will be subject to a maximum 60-day lock-up period following the close of the transaction. Remaining DBM Global minority stockholders will receive their pro rata share of the base purchase price entirely in cash.

Innovate said it intends to apply all net proceeds from the sale toward reducing its outstanding debt.

Paul Voigt, Interim CEO of Innovate, said the transaction represents "a meaningful step in our ongoing efforts to strengthen INNOVATE's balance sheet and improve our capital structure," adding that the company intends to "direct all net proceeds toward debt reduction."

The transaction has been approved by Innovate's board of directors and remains subject to customary closing conditions, including regulatory approvals. The parties expect the deal to close in the quarter ending December 31, 2026.

Cleary Gottlieb Steen & Hamilton LLP is serving as legal advisor to Innovate, and Jefferies is serving as financial advisor.