UPDATE: May 14: Tutor Perini announced yesterday that, "in light of continuing volatile market conditions," discussions regarding a potential acquisition of the firm have been terminated. It did not specify which company it had been in talks with but earlier reports indicate that it was in discussions with private equity firm Apollo Global Management.
Dive Brief:
- In response to recent media reports, Tutor Perini confirmed yesterday that a committee of its board of directors is engaged in discussions about its potential acquisition.
- Late last week, Reuters reported that Tutor Perini — the 12th largest contractor in the U.S. based on revenue — had been approached by private equity firm Apollo Global Management with a nearly $1 billion acquisition offer, according to sources familiar with the matter.
- While not commenting on that report, a company press statement said that Ronald N. Tutor, chairman and CEO, would continue to retain his management leadership role with the company following any potential transaction. The Los Angeles-based firm has retained Goldman Sachs and the law firms of Gibson, Dunn & Crutcher and DLA Piper to assist in its consideration of a potential transaction.
Dive Insight:
Tutor Perini recently reported a disappointing fourth quarter and FY 2019 with net losses of $86 million and $387.7 million, respectively, partially caused by a nearly $124 million charge related to the Alaskan Way Viaduct (SR99) Replacement project in Seattle and a pretax, noncash goodwill impairment charge of approximately $380 million attributable to a decrease in Tutor Perini's stock price announced in the second quarter. Tutor Perini had total debt of $834.5 million as of the end of December, according to Reuters.
Nevertheless, the specialty construction company had a near-record backlog of $11.2 billion in 2019 that includes the $432 million Division 20 Portal Widening and Turnback Facility in downtown Los Angeles; more than $375 million in electrical and mechanical projects; and the $263 million Miami-Dade County Courthouse in Miami. The company is also working on the California High-Speed Rail Authority's bullet train and the Los Angeles Metro's Purple Line 2 and 3, all of which are collectively worth $5 billion to Tutor Perini.
Other $1 billion-plus projects the company has in its sights are:
- $1.2 billion Metro-North Penn Station Access project in New York City
- $7 billion Sepulveda Transit Corridor project in Los Angeles
- $2 billion AirTrain at Newark Liberty International Airport in Newark, New Jersey
- $1.5 billion Honolulu Rail Transit project in Hawaii
- $2.5 billion Silicon Valley Extension for Bay Area Rapid Transit in the San Francisco area
- $2 billion landside roadway development at John F. Kennedy Airport in New York City
New York City-based Apollo Global Management was founded in 1990 by former Drexel Burnham Lambert banker Leon Black. The firm specializes in opportunistic buyouts and build-ups, corporate carve-outs and distressed investments, and often goes “against the grain” of what other investors are doing, according to its website.
Over the years, Apollo’s private equity investments have represented a variety of industries such as financial and business services, chemicals, natural resources, manufacturing and industrial and include Cox Media Group, jewelry retail store Claire's, Caesars Entertainment Corp., CareerBuilder and security company ADT.
