India's KEC Makes Strategic Acquisition: Focusing on Power Grid Development Throughout Americas

by: Wisdomsmith

KEC International Ltd has informed regarding a Press Release dated September 06, 2010 titled "KEC International executes a definitive agreement to acquire SAE Towers Holdings LLC." Stated in the press release:

KEC International Ltd. ("KEC") today announced that it has signed a definitive agreement to acquire 100% of SAE Towers Holdings LLC ("SAE Towers" or the "Company") from an entity affiliated with ACON Investments, L.L.C. ("ACON"), a Washington, D.C.-based private equity firm, for $95 million (excluding adjustments for working capital) on a cash free, debt free basis.

Headquartered in Houston, Texas, SAE Towers is the leading manufacturer of steel lattice transmission towers in the Americas with an annual production capacity of 100,000 metric tons. (Monterrey, Mexico - 35,000 MT & Belo Horizonte, Brazil - 65,000 MT).

The Company also manufactures steel poles for electrical transmission as well as related hardware. SAE Towers currently has over 750 employees. SAE Towers' management team and employees will continue with the Company.

Under the leadership of Mr. Luigi Ruggieri, SAE Towers' CEO, who partnered with ACON in 2007 to acquire the assets that comprise SAE Towers from the ABB Group (NYSE:ABB), the Company will continue to provide its clients throughout the United States, Canada, Brazil, Mexico and the rest of Latin America with highly-engineered structures critical for the construction of high-voltage transmission lines.

The transaction is expected to be EPS accretive to KEC from the first year (FY 2010-11). The transaction is expected to close in September 2010, subject to regulatory approvals and customary closing conditions. KEC was advised by Sagent Advisors Inc. and Daiwa Capital Markets India Private Limited as financial advisors, KPMG as accounting advisor, and Khaitan & Co. and White & Case LLP as legal advisors on this transaction.

SAE Towers was advised by Harris Williams and Co. as financial advisor and Hogan Lovelis LLP as legal advisor. Mr. Ramesh Chandak, Managing Director and CEO, KEC International Ltd said:

This acquisition will strengthen KECs global leadership position in the large and growing markets of North America and Latin America. SAE Towers has a significant presence in geographic areas which are of substantial interest to KEC. The transmission and distribution spend in these regions are currently rapidly increasing.

SAE Towers is well positioned to capitalize on these long term growth opportunities. We expect the combined entity to derive significant operational synergies, procurement and administrative cost savings and marketing opportunities. Going forward, we expect to leverage SAE Towers' existing customer relations for KEC's other business segments as well.

We look forward to working with SAE, its talented management team, employees and its respected customers. We are very proud to become the largest international tower manufacturing company in the world.

Mr. Jose Knoell, a partner oat ACON, added:

We are very pleased that KEC and SAE Towers' management team will be working together to further develop SAE Towers' business throughout the Americas. Given its experience and resources in power transmission globally, KEC will be an excellent home for SAE Towers.

We are also extremely proud of the significant shareholder value that SAE Towers' management team generated within a short amount of time and amidst one of the most challenging macroeconomic environments in recent history.

Mr. Luigi Ruggieri, CEO of 5AE Towers, concluded:

The development of power infrastructure in Brazil and Mexico will represent a compelling market opportunity for KEC for many years to come as power consumption outpaces GDP growth in these markets.

In addition, KEC and SAE Towers are uniquely positioned to play a key role in the expansion and upgrading of the US and Canada power grid, where significant investment is required to improve reliability and support the development of new wind, solar and conventional generation. Our management team is very enthusiastic about joining KEC and also bringing expanded products and services to our valued customers.

Disclosure: No positions