Civil builder Construction Partners has entered into an agreement to acquire Lone Star Paving for $654 million in cash and 3 million shares, the Dothan, Alabama-based infrastructure firm announced Oct. 21. At the previous day's close, that puts the acquisition's total value at $878 million.
Lone Star, headquartered in Austin, Texas, is a vertically integrated asphalt manufacturing and paving company operating in high-growth markets in Central Texas, with 10 hot-mix asphalt plants, four aggregate facilities and a liquid asphalt terminal, according to the release. The acquisition will be immediately accretive to earnings upon closing and is anticipated to generate an annualized run-rate contribution of $530 million in revenue in fiscal year 2025.
Lone Star provides asphalt and related transportation construction services to public and commercial customers primarily in the Austin, San Antonio and Temple-Killeen metropolitan areas, three of the country’s fastest-growing markets, per the release.
“We are excited to announce this transformational acquisition to add an outstanding platform company as we enter our seventh state,” Construction Partners President and CEO Fred J. Smith III said in the release. “Lone Star is a market leader across multiple high-growth metropolitan areas in central Texas, with a deeply experienced and effective management team and a culture of operational excellence.”
Construction Partners’ acquisition of Lone Star aligns with its established growth strategy of entering new states by buying a platform company with an experienced local management team, reputation for quality and opportunities for growth, per the release.
Analysts with Baird Equity Research’s Industrial Services team also praised the move.
“We like [Construction Partners’] acquisition of Lone Star Paving (LSP), the largest in company history, and its entrance into the large and growing Texas markets,” they said in an Oct. 21 investor note.
