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Northwest Pipe Acquires Ameron Water Transmission In Opportunistic Deal


  • Northwest Pipe announced that it has acquired Ameron Water Transmission for $38.3 million in cash.
  • Ameron provides a range of water and wastewater pipe products for infrastructure and other industries globally.
  • NWPX appears to be acquiring Ameron at a bargain price; assuming prompt integration, the deal should be strong win as NWPX prepares for higher market demand.
  • This idea was first discussed with members of my private investing community, IPO Edge. To get an exclusive 'first look' at my best ideas, start your free trial today >>

Quick Take

Northwest Pipe Company (NASDAQ:NWPX) announced it has acquired the Ameron Water Transmission Group from National Oilwell Varco (NOV) for $38.3 million.

Ameron Water Transmission produces concrete and steel pipe systems in the United States, Mexico, Canada, and Central and South America.

NWPX will hope to do better with the deal than National Oilwell did, at least by paying a tiny fraction of NOV's acquisition price for an entity that should fit well into its operations.

Target Company

The Rancho Cucamonga, California-based former division of National Oilwell Varco (NOV) provides a range of steel, fiberglass-composite and concrete pipes for water and wastewater conveyance purposes in North America, Central and South America.

National Oilwell acquired Ameron in 2011 for $777 million, so it appears the acquisition performed poorly for NOV in its seven years of ownership.

The firm posted $57 million in sales in 2017 and has facilities in California and Mexico.

Ameron has customers in the industries of chemical, industrial, energy infrastructure and transportation markets.

Market & Competition

According to a 2014 market research report by Freedonia, the water and wastewater pipe market will grow 7.7% per year to $18.1 billion in 2018.

According to another report, by Bluefield Research, investments in this sector will grow roughly from $12 billion in 2017 to $14 billion in 2026.

The main drivers for this expected growth are the increase in construction activity and the ongoing need for renewal of the US sewage system.

Major competitive vendors that provide water and wastewater pipes include:

  • JM Eagle
  • Pipelife
  • North American Pipe
  • Advanced Drainage Systems (WMS)
  • American Cast Iron Pipe

Acquisition Terms and Rationale

NWPX disclosed the acquisition price as $38.3 million paid from cash on hand.

Management didn't disclose a change in financial guidance in the deal announcement.

A review of NWPX'

This article was written by

Donovan Jones profile picture

I'm the founder of IPO Edge on Seeking Alpha, a research service for investors interested in IPOs on US markets. Subscribers receive access to my proprietary research, valuation, data, commentary, opinions, and chat on U.S. IPOs. Join now to get an insider's 'edge' on new issues coming to market, both before and after the IPO. Start with a 14-day Free Trial.

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Comments (6)

Ameron international was my first stock pick ever. Two weeks after i bought it NOV took it off market for a quick gain for me.

Now I own NOV which I bought in the 30's sometime after 2016 . I think NOV is still worth substantially more than it's current trading range in the 40's.
The Ameron business that National Oilwell Varco purchased was much larger than the assets that were just sold to Northwest. NOV was mainly interested in Ameron's steel pipe plants as they were converted to produce wind turbines, and Ameron's very valuable Hawaii assets. The assets included in this sale, primarily a concrete pipe plant in Northern California, were a very small part of Ameron and not a strategic fit for NOV.
03 Aug. 2018
A quick look at the annual report for Ameron before the NOV purchase shows the Water Transmission Group was a small portion of the total company.
are we sure that wasn't 77 mil.
Donovan Jones profile picture
I linked to the press release - it was $777 million:

Jules James profile picture
Sorry. Six conseutive money-losing quarters on declining revenues -- I'm feeling NWPX picked up a price-bumping press release, not a legit M&A. Ameron's value plummeted from $777M to $38M in 7 years? Turning a profit there seems pretty remote.
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