Private equity firm to buy Harsco’s infra division

Clayton, Dubilier & Rice will buy the engineering company’s infra division and merge it into Brand Energy & Infrastructure Services, a company it is acquiring from First Reserve.

New York-based private equity firm Clayton, Dubilier & Rice (CD&R) is simultaneously acquiring Harsco’s infrastructure division and Brand Energy & Infrastructure Services (Brand) from First Reserve, which it will merge into a new combined entity.

The new company, which has an enterprise value of about $2.5 billion, will continue to operate under the name Brand Energy & Infrastructure Services and will provide single-source specialised industrial services to the worldwide energy and infrastructure sectors, according to a joint statement issued by CD&R and Harsco.

Engineering company Harsco, which said it is selling its infrastructure business as part of an initiative to simplify its business, will receive about $300 million in cash and a 29 percent stake in the new company.

“By maintaining an equity position in a stronger and more profitable combined business, Harsco stands to benefit from the additional value that will be created by the new venture,” Harsco president and chief executive Patrick Decker said.

Private equity firm First Reserve did not disclose the amount for which it is selling Brand.

“Approximately two-thirds of the combined company’s revenues are expected to be generated from the energy sector, with a significant level of recurring revenue driven by required maintenance work,” according to the statement.

Brand chairman and chief executive Paul T. Wood will continue serving in his role in the combined company, while representatives from CD&R, Brand and Harsco will serve on the company’s board of directors. CD&R partner John Krenicki will serve as lead director.

“The combination of these two groups of strong local operating companies and management teams creates a true global leader in both specialised industrial services and forming and shoring,” said Wood.

“The resulting global footprint will enable us to offer best in class operating capabilities to our customers in the growing energy and infrastructure markets,” he added.

The transaction is expected to close by the end of the year, subject to closing conditions, regulatory approvals, and trade union consultations.

Founded in 1978, CD&R has since invested in 56 US and European businesses with an aggregate transaction value of approximately $90 billion. The firm’s industrial investments in recent years include ITW’s former decorative surfaces division Wilsonart; Ingersoll Rand’s former division Hussmann International; and Tyco International’s electrical and metal products division Atkore International.