Dive Brief:
- Layton Construction and STO Building Group, formerly known as the Structure Tone Organization, announced Wednesday that Layton will merge with STO as part of a deal that should be complete by the end of the year. Financial details of the agreement have not been disclosed.
- The companies said that the merger will allow each to expand their geographic reaches and offerings. Robert Mullen, CEO of STO, added that bringing Layton on board will give STO entry into new sectors like healthcare and industrial construction and that STO's employee stock ownership program was a key factor in Layton's decision to become a member of the STO family of companies.
- Layton, like all STO companies, will retain its branding — name, logo, etc. — and company culture. Layton's leadership team will keep their positions and ownership. According to the firms, the merger will create the fourth-largest construction company in the United States.
Dive Insight:
Layton's owners, according to Engineering News-Record, will become shareholders in STO's parent organization, the investment group Global Infrastructure Solutions Inc (GISI). Dan McQuade, former president of AECOM's construction services division, is a managing director at GISI. McQuade left AECOM as part of a management shift last year that saw Chief Operating Officer Randy Wotring step into the position.
With $1.8 billion in revenue last year, Layton is headquartered in Utah and performs design-build, construction management and general contracting work across the country in a wide variety of sectors. (Shown above is one of its healthcare projects, the Huntsman Cancer Institute at the University of Utah.) In addition to Utah, the company's 1,000 employees are spread through offices in Arizona, California, Colorado, Florida, Hawaii, Idaho and Tennessee.
New York City-based STO reported $4.9 billion in revenue last year, making it the 14th largest contractor in the country according to Engineering News Record. During the last three years, other companies that have merged with STO include Govan Brown, based in Canada, and the U.S. construction firms Ajax Building Co. and BCCI Construction. STO, through its member companies, provides services that include site selection analysis, design constructability reviews, interior fit-outs, new building construction and building infrastructure upgrades and modernization.
Structure Tone, according to an analysis of New York City construction activity by The Real Deal, generated $2.6 billion of revenue with its alteration and renovation business from 2012 to 2017, making it the No. 1 city contractor in that niche as of May 2017.
Last year saw record construction and engineering industry M&A activity, according to report from FMI Capital Advisors Inc. earlier this year — 534 total deals, which was a 26.5% increase from 2017. One of those deals was the merger of petroleum contractor McDermott International with Chicago Bridge & Iron Co. in May 2018. Despite having brought in revenue of $6.7 billion last year, the company brought on two bankruptcy experts onto its board of directors after it missed an early-November interest payment.
