Under an agreement announced late last month, Rialto, Calif.-based Thompson Pipe Group will acquire the concrete and steel pressure pipe assets of U.S. Pipe, a division of concrete drainage products leader Forterra Inc., Irving, Texas. In exchange for five pressure pipe plants and a fittings facility, the latter will receive $23.2 million in cash plus Thompson’s Conroe, Texas, concrete drainage pipe and products operation.
“We believe this transaction, which includes not only the divestiture of non-core assets but also the acquisition of a facility in the large Houston market, will enable us to sharpen our focus on our core business and high-margin growth opportunities,” says Forterra CEO Jeff Bradley.
The concrete and steel pressure pipe operations reported a $1.6 million loss on 2016 sales of $99.7 million. They have minimal synergies with the core drainage products business due to limited customer overlap, separate manufacturing facilities and a different manufacturing process, notes Forterra, which characterizes pressure pipe as a “narrow market segment with significant competition and limited near-term catalysts for improvement in demand.”
Thompson Pipe CEO Ken D. Thompson views the asset exchange as an opportunity to provide focus and discipline to turn a business around. “My father started this company as a small private underground utility contractor in 1972,” he observes. “As we grew into large public works projects, we gained experience installing the very products we now produce. We know what it takes to be the best construction partners for trenchless, drainage, water and wastewater owners, engineers, and contractors.”
“We’ll now be able to supply exactly the right product for the right application on a national scale,” adds Thompson Pipe Executive Vice President Mike Leathers. “It’s an enormous challenge, but one that Thompson Pipe Group will be well equipped to meet. With a complete range of pipe products and the engineering support, we can serve our customers like never before. We’ll have, by far, the largest offering of open cut and trenchless product solutions in North America.”
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