WATSONVILLE, CA-Granite Construction Inc. has signed an agreement to acquire Kenny Construction Co., a national contractor and construction manager specializing in the power, tunnel, water and civil markets. Under the terms of the agreement, Granite will pay the purchase price of $130 million in cash at closing in exchange for 100% of the outstanding shares of Kenny.

Founded in 1927, Kenny is a privately-owned, Northbrook, IL-based company with approximately 425 employees. Kenny's revenues are projected to be $270 million for 2012 with approximately 50% of revenues associated with the power sector, 20% associated with tunneling-related work and 30% coming from water/underground and other heavy/civil related work.

As of Dec. 31, 2012, Kenny's backlog is projected to be approximately $390 million, according to a prepared statement. Granite intends to finance the transaction through a combination of cash and available borrowings under its existing revolving credit facility. One-time costs related to the acquisition of Kenny are estimated to be approximately $5 million and will be recorded in the fourth quarter 2012, according to the release.

“The addition of Kenny's expertise in the power, tunnel and underground markets will significantly expand our presence in these key areas as well as enable us to leverage our capabilities and geographic footprint to take advantage of opportunities across the country,” says James H. Roberts, Granite's president and chief executive officer.

“This acquisition is an important milestone for Granite as we continue to execute on our strategic plan to diversify, strengthen and grow our business,” he says.

BofA Merrill Lynch is acting as financial advisor to Granite in connection with the transaction. FMI Corp. is acting as financial advisor to Kenny.

Instant Insights /

Granite Pays $130M for Kenny Construction

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