Dycom Industries, Inc. (Quote) has signed a definite merger agreement to acquire Arguss Communications, Inc. (Quote) ) in an all-stock swap valued at $83.7 million. In the transaction, each outstanding share of Arguss common stock will be exchanged for 0.3333 shares of Dycom common stock.
Based upon the closing price of Dycom common stock of $17.30 on Jan. 4, the value of the consideration to be received by stockholders of Arguss is approximately $5.77 per share of Arguss.
In addition, the Palm Beach Gardens, Fla.-based Dycom will assume $65 million of Arguss' outstanding net debt resulting in a total transaction value in excess of $148 million. The implied value represents a premium of approximately 30.5 percent to the closing price of Arguss common stock on Jan. 4.
The stock exchange offer will be followed by a merger in which Dycom would acquire, at the same exchange ratio, the remaining shares of Arguss common stock not previously acquired in the exchange offer. The exchange offer is expected to commence as soon as practicable after the filing of required documents with the U.S. Securities and Exchange Commission.
"Dycom's acquisition of Arguss strategically strengthens our customer base, geographic scope, and technical service capabilities," said Steven E. Nielsen, chairman and chief executive officer of Dycom. "It significantly enhances our broadband construction and design service offerings just as recent industry developments indicate new potential opportunities. Together our combined scale will enable us to better serve our customers while also generating opportunities for cost synergies."
The Rockville, Md.-based Arguss conducts its operations through its wholly owned subsidiaries, Arguss Communications Group, Inc. and Conceptronic, Inc. Arguss Communications Group designs, constructs, reconstructs, maintains and repairs telecommunication systems and provides aerial, underground and premise construction services and splicing of both fiber optic and coaxial cable to major telecommunication customers.
Conceptronic manufactures and sells advanced, computer-controlled capital equipment used in the SMT circuit assembly industry.
"We believe this transaction is an excellent fit for both companies, both strategically and operationally. Dycom has demonstrated an outstanding track record in the industry, and the combination offers our stockholders an excellent opportunity for future growth," said Rainer H. Bosselmann, chairman and chief executive officer.
In connection with the merger agreement, Dycom has entered into a stockholders' agreement with Bosselmann and other directors and executive officers of Arguss to tender their shares into the offer, vote in favor of the merger and against any competing transaction and grant an irrevocable proxy to Dycom.
The offer is also subject to the lenders under Arguss' syndicated credit agreement agreeing to extend their forbearance agreement until the consummation of the merger.
Dycom is a provider of engineering, construction, and maintenance services to telecommunication providers throughout the U.S. Additionally, Dycom provides similar services related to the installation of integrated voice, data and video local and wide area networks within office buildings and similar structures.
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