Sterling acquires North Texas concrete construction company for $85 million

Sterling Construction Company Inc. of The Woodlands announced March 9 that it has signed a definitive agreement to purchase Denton-based Tealstone Construction for approximately $85 million, subject to specified post-closing adjustments.

Sterling plans to finance the transaction through a combination of seller financing, common stock, and new debt.

Tealstone serves commercial contractors and multi-family developers, as well as national homebuilders in Texas and Oklahoma providing commercial and residential concrete construction services.

. The transaction is expected to close in the second quarter of 2017 and is contingent on customary closing conditions including a new $85 million credit financing and regulatory approvals.

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• Tealstone focuses on concrete construction of commercial buildings, elevated slabs, multi-family and residential housing foundations and serves commercial contractors, multi-family developers and leading homebuilders.

• The acquisition provides Sterling with diversification of revenue streams, a broader range of customers, operational synergies and expanded project opportunities.

• The deal gives Tealstone the potential to expand into other regions where Sterling has a major presence.

• Sterling plans to finance the acquisition through a combination of $15 million of seller financing, 1.9 million shares of Sterling common stock, and $55 million of debt from Sterling’s new $85 million credit facility, which will replace the company’s existing facility.

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“The acquisition of Tealstone is well aligned with our growth strategy and meets our criteria for expanding into adjacent markets while improving margins, and diversifying our revenue sources and customer base,” said Joe Cutillo, the recently-appointed president and former executive vice president of strategy and business development for Sterling. “More specifically, we expect Tealstone’s expertise in concrete construction to enable us to increase our penetration into the Texas market for commercial projects by strengthening our ability to win attractive airport, parking garage and other, non-heavy highway opportunities throughout the state. Additionally, we believe that this acquisition will allow us to enhance the profitability of our Texas road work given Tealstone’s unique capabilities in the construction of curbs, sidewalks and driveways, which are often a meaningful portion of the costs to complete roadway projects.”

Sterling is a heavy civil construction company that specializes in the building and reconstruction of transportation and water infrastructure projects in Texas, Utah, Nevada, Colorado, Arizona, California, Hawaii, and other states. Its transportation infrastructure projects include highways, roads, bridges, airfields, ports and light rail. Its water infrastructure projects include water, wastewater and storm drainage systems.