Forterra (FRTA) - Get Report shares rose after the maker of water and drainage infrastructure pipes definitively agreed to be acquired by the Atlanta concrete producer Quikrete, a deal valued at $2.74 billion including debt.
Under the terms, Quikrete will pay $24 for each Forterra share. Shares of Forterra, Irving, Texas, at last check rose 4% to $23.04.
“Forterra and Quikrete are an ideal strategic fit, and this combination is a natural next step for our company, enabling us to better serve our customers across the company on their concrete projects from start to finish," Will Magill, chief executive of Quikrete, said in a statement.
Forterra’s pipe business builds Quikrete's capabilities in potable-water distribution, Magill added.
The deal price is a premium of 39% to Forterra's 90-day volume-weighted-average share price on Feb. 19.
The deal "delivers a compelling cash premium to our shareholders,” Karl Watson Jr., CEO of Forterra, said.
"Over the past two years, we have made significant progress executing on our five improvement pillars of safety, plant-level operational discipline, enhanced commercial capabilities, working capital efficiency, and general and administrative expense effectiveness. Today’s announcement advances that progress," he added.
Forterra will report fourth-quarter earnings on Feb. 24.
The Dallas private equity firm Lone Star Funds holds a 53% stake in Forterra and approved of the transaction by written consent, the two companies said. So no further action by Forterra's holders is required, they said.
Lone Star acquired Forterra in 2015 and has controlled it since it went public in 2016, they said.
The transaction is expected to close in the fourth quarter, subject to conditions including antitrust clearance.