DALLAS — Arcosa Inc. announced it has entered into a definitive agreement to sell its storage tanks business to Black Diamond Capital Management, LLC for $275 million in cash, subject to customary transaction adjustments.
Established in 1933 and marketed under the Arcosa Tank and TATSA brands, the company’s storage tanks business is a manufacturer of steel pressure tanks for the storage and transportation of propane, ammonia and other gases serving the residential, commercial, energy, and agricultural markets with operations in the United States and Mexico.
Reported within the company’s engineered structures segment, revenues were approximately $200 million in 2021. Following the transaction, the company will continue to maintain a strategic manufacturing platform in Mexico, primarily supporting its engineered structures segment with the flexibility to manufacture other Arcosa products.
The transaction is expected to close in the second half of the year, subject to regulatory approvals in the U.S. and Mexico and other customary closing conditions.
Antonio Carrillo, president and CEO of Arcosa said, “Today’s announcement represents a significant milestone in the advancement of our long-term vision to reduce the complexity of Arcosa’s overall portfolio and focus on strategic growth in select markets where we can achieve a sustainable competitive advantage.”
“At spin, we prioritized improving the margins of our storage tanks business, which was unprofitable in 2018. Our team has done a fantastic job introducing lean initiatives and reinvigorating growth in this business, creating an attractive platform for future capital investment. I am confident in their continued success under the focused ownership of Black Diamond. I want to thank our employees and customers for their significant contributions to Arcosa, and we expect Arcosa Tank’s reputation for best-in-class products to continue with this transaction.”
Carrillo continued, “The transaction is expected to close later this year, and we intend to invest the proceeds in our construction products platform as we continue to shift our business mix toward less cyclical, higher-margin growth opportunities that leverage our core strengths and drive long-term shareholder value creation.”
Evercore served as financial advisor to Arcosa, while Gibson, Dunn & Crutcher LLP and Creel, García-Cuéllar, Aiza y Enriquez, S.C. served as its legal advisors.
