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AZZ buys Nuclear Logistics

by Thomas Zadvydas | Published April 30, 2012 at 4:10 PM

Fort Worth electrical components maker AZZ Inc. announced Monday, April 30, that it acquired nuclear power safety systems manufacturer Nuclear Logistics Inc. for up to $100 million.

The target, also of Fort Worth, makes electrical and mechanical components used to help nuclear equipment meet industry safety qualifications, including seismic and environmental standards. The business works with some major manufacturing players to produce and distribute compliant equipment for safe use in nuclear power systems. Companies it works with include Ametek Inc., Siemens AG and Cooper Industries plc.

Nuclear power provides roughly 19.2%, of the electricity used in the U.S.

Nuclear Logistics' sales are expected to range between $70 million and $80 million under the first year of AZZ ownership, the buyer said. Founded in 1991, the target has about $75 million in backlog and employs about 173 people.

"NLI is a great addition to AZZ's outstanding portfolio of brands under [our] electrical and industrial products segment," AZZ president and chief executive David H. Dingus said in a statement. "NLI plays the critical role of enhancing and ensuring the safety of nuclear facilities, especially in light of the recent developments in Fukushima, Japan, and the increased awareness of safety and redundancy for the nuclear industry in general."

Dingus added that the company continues to look for other bolt-on acquisitions.

Terms of the deal call for AZZ to make an initial payment of $80 million plus debt. The purchase also includes an earnout of up to $20 million if Nuclear Logistics hits certain financial targets. The deal should be accretive to AZZ's earnings per share by between 20 cents and 25 cents, including acquisition costs and amortization of intangible assets.

The transaction should close June 1, pending customary closing conditions, including expiration or early termination of the Hart-Scott-Rodino waiting period.

AZZ's electrical and industrial products unit recorded $162.6 million in sales and $27 million in operating income for 2011, as compared to $203.4 million in sales and $40.8 million in operating income for the previous year. This was a 20% and 33.8% decline in sales and operating income, respectively.

Last April, AZZ bought iron and steel coatings manufacturer North American Galvanizing & Coatings Inc. of Tulsa, Okla., for $125.6 million. On Jan. 20 it purchased metallurgical business Galvan Metals Inc. of Montreal for undisclosed terms.

Nuclear Logistics declined comment Monday. AZZ didn't return calls.

AZZ has a market value of about $645 million. Its shares rose 37 cents, or 0.73%, to $51.20, Monday afternoon.

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