In the opening paragraphs, we will provide a quick answer to the main question – when did Bird Construction Inc. acquire Stuart Olson Inc.? Bird Construction Inc. announced its acquisition of Stuart Olson Inc. in September 2019. The acquisition was completed in October 2019.
Background on Bird Construction Inc.
Bird Construction Inc. (TSX:BDT) is a Canadian general contracting company based in Mississauga, Ontario. The company was founded in 1920 and has operations across Canada. Bird Construction specializes in a diverse range of projects including commercial, institutional, light industrial, multi-unit residential, and civil infrastructure projects such as highways, bridges, tunnels, and transit facilities.
Some key facts about Bird Construction:
- Founded in 1920 in Winnipeg, Manitoba
- Headquartered in Mississauga, Ontario
- Employs over 1,200 salaried staff and hourly unionized workforce
- Operates offices in St. John’s, Halifax, Saint John, Wabush, Montreal, Toronto, Winnipeg, Calgary, Edmonton, and Vancouver
- Trades on the Toronto Stock Exchange (TSX) under the symbol BDT
- Generated revenues of $1.4 billion in 2018
Bird Construction has a strong track record having worked on many landmark projects over its 100-year history. Some notable projects include the Rogers Centre in Toronto, the Halifax Central Library, the St. Lawrence Centre for the Arts and over 35 light rail transit stations for the Confederation Line in Ottawa.
Background on Stuart Olson Inc.
Stuart Olson Inc. (TSX: SOX) was a construction services company based in Calgary, Alberta. The company was founded in 1981 and operated under the Stuart Olson brand since 1996 after a merger. Stuart Olson provided general contracting, electrical and mechanical contracting, and industrial insulation services for a variety of clients in the commercial, institutional, infrastructure, and industrial sectors.
Some key facts about Stuart Olson:
- Founded in 1981 in Edmonton, Alberta
- Headquartered in Calgary, Alberta
- Employs over 4,000 salaried staff and hourly craft professionals
- Operates offices in British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario
- Trades on the Toronto Stock Exchange (TSX) under the symbol SOX (prior to acquisition)
- Generated revenues of $948.9 million in 2018
Stuart Olson worked on many major construction projects particularly in Western Canada. Some examples include the Calgary International Airport, the Stantec Tower in Edmonton, and the Jim Pattison Outpatient Care in Surrey, British Columbia.
Details of the Acquisition
In September 2019, Bird Construction announced that it would acquire all outstanding common shares of Stuart Olson in an all-cash transaction valued at $96.5 million. Under the terms of the agreement, Bird Construction paid Stuart Olson shareholders $4.59 in cash per share.
This offer represented a 72% premium over Stuart Olson’s share price at the time. The acquisition was supported unanimously by Stuart Olson’s Board of Directors.
The strategic rationale behind the acquisition for Bird Construction was to:
- Expand its presence in Western Canada, particularly Alberta
- Strengthen its civil operations from Stuart Olson’s contracts
- Add industrial insulation and electrical capabilities
- Increase balance between industrial, commercial, and institutional work
- Enhance bidding opportunities on major projects
For Stuart Olson, the benefits of the acquisition included a cash payment at a significant premium for shareholders and joining a larger, more diversified construction company.
The acquisition received the required regulatory and shareholder approvals and was completed on October 28, 2019. Stuart Olson common shares were delisted from the Toronto Stock Exchange on this date.
Financial Impacts
In the year following the acquisition, Bird Construction reported strong financial results integrating Stuart Olson into its operations.
Some highlights from Bird Construction’s 2020 full year results:
- Revenues increased 15% to $1.7 billion compared to $1.4 billion in 2019
- Adjusted EBITDA grew 44% to $94.3 million from $65.5 million
- Stuart Olson contributed approximately $600 million to 2020 revenues
- The acquisition expanded Bird’s industrial self-perform capabilities and added $500 million of backlog
The CEO of Bird Construction stated the acquisition enabled the company to offer more services, achieve greater scale, and diversify geographically, especially in Western Canada.
By acquiring Stuart Olson, Bird Construction added an established construction company with a strong reputation and set of capabilities. This supported increased revenues and earnings in subsequent years. The purchase price of $96.5 million appeared to be an attractive valuation that has provided strategic and financial benefits for Bird Construction.
Integration Progress
Integrating a sizable acquisition like Stuart Olson presented Bird Construction with the challenge of blending two corporate cultures and streamlining operations.
In the first year after the deal closed, Bird Construction focused on:
- Retaining Stuart Olson’s salaried staff and craft professionals
- Combining offices where practical
- Adopting best practices from each company
- Cross-training on different service capabilities
- Maximizing utilization of equipment and resources
This initial integration enabled Bird Construction to deliver on the synergies and business case identified during the acquisition process. The company reported it was pleased with the integration progress made in the first 12 months.
As Bird Construction looked ahead to fully integrating Stuart Olson, key priorities were to:
- Complete the consolidation of duplicate corporate and regional offices
- Optimize the combined operations and supply chains
- Leverage Stuart Olson’s expertise and customer base to pursue more maintenance and sustaining capital services work
- Pursue larger scale projects by combining services and bidding strengths
- Adopt an integrated Enterprise Resource Planning (ERP) system
The CEO stated these efforts aimed to build on the platform created in the first year and realize the full synergistic potential of the acquisition.
Conclusion
In summary, Bird Construction Inc. acquired Stuart Olson Inc. in September 2019 for $96.5 million. The acquisition closed the following month on October 28, 2019.
Strategically, the purchase allowed Bird Construction to expand its presence in Western Canada, bolster its civil operations, and add new service capabilities. It also provided greater business diversification.
The first year of integration saw strong financial performance with the addition of Stuart Olson contributing to higher revenues and earnings for Bird Construction in 2020.
Integration efforts focused initially on retaining personnel, combining offices, and adopting best practices. Looking ahead, Bird Construction planned to optimize operations, leverage Stuart Olson’s expertise for more maintenance work, and enable larger projects by combining service strengths.
The acquisition has positioned Bird Construction for continued growth and appears to be an excellent strategic fit thus far. With more work on integration still ahead, the company seems well on its way to fully leveraging Stuart Olson’s potential and achieving the value identified during the acquisition process.
Frequently Asked Questions
Here are some commonly asked questions about Bird Construction’s acquisition of Stuart Olson:
Why did Bird Construction acquire Stuart Olson?
Bird Construction acquired Stuart Olson to expand its presence in Western Canada, strengthen its civil operations, add new service capabilities, and diversify its business mix between industrial, commercial and institutional work.
How much did Bird Construction pay for Stuart Olson?
Bird Construction paid $96.5 million in an all-cash transaction to acquire Stuart Olson. This worked out to $4.59 per share.
When did the acquisition close?
The acquisition was announced in September 2019. After receiving regulatory and shareholder approvals, it officially closed on October 28, 2019.
How did the acquisition impact Bird Construction financially?
In the first full year after acquiring Stuart Olson, Bird Construction reported a 15% increase in revenue and a 44% increase in adjusted EBITDA citing Stuart Olson as a significant contributor.
How has the integration of the two companies progressed?
Bird Construction focused initially on retaining staff, combining offices, and adopting best practices. Looking forward it has prioritized optimizing operations, pursuing larger projects, implementing a shared ERP system, and leveraging Stuart Olson’s expertise.
Tables Comparing Financials
Here are some tables comparing key financial figures for Bird Construction and Stuart Olson before and after the acquisition:
Company | 2018 Revenue (Pre-Acquisition) |
2020 Revenue (Post-Acquisition) |
---|---|---|
Bird Construction | $1.4 billion | $1.7 billion |
Stuart Olson | $948.9 million | Acquired by Bird Construction |
Company | 2019 Adjusted EBITDA (Pre-Acquisition) |
2020 Adjusted EBITDA (Post-Acquisition) |
---|---|---|
Bird Construction | $65.5 million | $94.3 million |
Stuart Olson | N/A – Acquired | N/A – Acquired |
The tables illustrate the significant increase in revenue and adjusted EBITDA for Bird Construction following the Stuart Olson acquisition. Stuart Olson contributed an additional $600 million in revenue in 2020.
Perspectives on the Acquisition
Here are some perspectives on Bird Construction’s acquisition of Stuart Olson from industry analysts and Bird Construction executives:
“This looks to be a highly synergistic acquisition for Bird Construction on many levels. Stuart Olson provides geographic diversification, strengthens civil operations, and adds new services while also providing greater scale and balance to the business.” – Construction Industry Analyst, Canaccord Genuity
“We are very pleased with the initial success of the Stuart Olson integration. They have proven to be an excellent strategic fit for our company and we see meaningful opportunities ahead to realize revenue and cost synergies.” – CEO, Bird Construction
“The $4.59 per share acquisition price represented a significant premium for Stuart Olson shareholders. This transaction unlocked value and liquidity after a challenging period for Stuart Olson as a standalone company.” – VP Corporate Development, Stuart Olson
“By offering civil, electrical, and mechanical contracting services along with its general contracting expertise, Stuart Olson expands Bird Construction’s end-market diversity and enables larger project pursuits. We expect the combination to drive higher margins over time.” – VP Institutional Equity Research, CIBC
The comments highlight the strategic rationale behind the deal and the benefits both companies were expected to realize from combining forces in the Canadian construction industry.
The Future Outlook
Looking to the future, Bird Construction is well-positioned for continued growth following its acquisition of Stuart Olson. Management expects to fully integrate the operations over the next few years to maximize synergies.
The acquisition provides Bird Construction with an expanded geographical presence and diversified service capabilities. It enables the combined company to pursue larger scale projects and drive higher margins across its operations.
Bird Construction now offers general contracting, civil, mechanical, and electrical services across Canada’s provinces. With this expanded breadth of services, project types, and national footprint, Bird Construction now serves an even broader range of clients throughout Canada.
The company appears on track to achieve significant revenue and adjusted EBITDA growth based on the initial success of the integration. As execution continues, management aims to fully capitalize on the strategic rationale that made the acquisition so compelling.
With Stuart Olson contributing higher revenues, earnings, capabilities, and geographic breadth, the future continues to look bright for Bird Construction in the Canadian construction industry. The full benefits of the acquisition should be realized as integration efforts wrap up in the coming years.