Algeco boosts remote site business with US$625m Target acquisition
By Murray Pollok13 February 2013
Algeco Scotsman has agreed to buy Target Logistics Management, a US company that rents temporary accommodation for workers in remote locations. The price is approximately US$625 million, comprising $275 million immediately and deferred performance-based payments of $350 million.
Target Logistics, based in Boston, Massachusetts but with its operational headquarters near Houston, provides remote workforce accommodation to the oil and gas and related infrastructure sectors in the US. Its services include housing, infrastructure design and construction, catering, facility maintenance, utilities, security, transportation and logistics.
Algeco said the acquisition would help it expand in its fastest growing market segment, with plans to double Target’s 5000 bed accommodation capacity within three to five years.
Target has 16 facilities in North Dakota, Arizona, Texas and Mexico. It will continue to operate under its current brand, and the existing Target Logistics management team will remain in place, including Brian Lash, Target founder and chief executive officer. Mr Lash will continue to lead Target, tasked with expanding its business using Algeco’s global network.
Algeco Scotsman’s chief executive officer and president Jean-Marc Germain said; “We see continued high growth potential for our remote workforce accommodation solutions globally and we believe the acquisition of Target Logistics and its high quality full-service product offering will help us accelerate our expansion in this important product end market”.
The initial payment of $275 million comprises approximately $86 million in cash, $86 million of Algeco stock and $103 million of assumed indebtedness and working capital. The deferred payment of the balance will be made primarily in Algeco stock, which implies an enterprise value for its business of $6 billion. The total price represents an EBITDA multiplier of approximately 11.