U.S. Filter, Building One Services Latest To Play Consolidator Game
With its latest purchase, U.S. Filter (NYSE: USF) now owns two out of the top five and three out of the top 46 plumbing and mechanical contracting companies in the country. U.S. Filter is a provider of commercial, industrial, municipal and residential water and wastewater treatment systems, products and services. It also has a distribution division, and not contracting.
Since March 1998, U.S. Filter has purchased the Kinetic Group ($378 million), No. 2 on the 1998 PM 100; Fullman Co. ($130.34 million), No. 9 on the 1998 PM 100; and J.B. Rodgers ($82.92 million), No. 46 on the 1998 PM 100. Terms of the transactions were not disclosed.
The J.B. Rodgers acquisition was a strategic move to expand as a provider of process systems for the semiconductor, pharmaceutical and biotech industries.
“We’re trying to merge with companies that complement our company,” said Veronica Karnig, director of marketing with the Kinetics Group.
Karnig said U.S. Filter is looking to acquire more companies, but declined to answer who, where or in what time frame. To date, U.S. Filter has been acquiring companies in the western United States, including California, Oregon and Arizona.
California-based U.S. Filter has more than 28,000 employees in 94 countries with revenues near $5 billion. It operates on three different levels in the industry, manufacturing valves, fittings and couplings; distributing $1.3 billion worth of plumbing goods; and becoming service-oriented with its newly purchased companies.
J.B. Rodgers Mechanical Contractors is one of the oldest and largest specialty contracting services in Arizona. The company, which was featured in the August 1997 PM, has more than 600 employees and currently serves the California, Arizona, Nevada and Pennsylvania markets.
Building One: Another industry consolidator sending signals it’s come with real money in hand, Building One Services Corp. (NASDAQ: BOSS), announced four mechanical contractor acquisitions in mid-December. The acquisitions will add approximately $180 million in annualized revenues to the company’s $1.2 billion annualized revenues — $400 million in the mechanical group. Additionally, the company has seven more pending acquisitions, with the deals scheduled to be closed by April.
In an effort to boost its sagging stock prices, BOSS spearheaded a move to buy back 78 percent of its stock in late December while announcing a recapitalization plan. The company still expects to fall short of Wall Street expectations, posting $.36 per share in the fourth quarter vs. the estimated $.42.
Building One plans on rapidly expanding by acquiring mechanical, janitorial and electrical services companies in a bid to become a single-source supplier of those services to big property owners.
U.S. Filter and Building One Services Corp. enter a crowded field of PHC consolidators that includes American Residential Services, Blue Dot., Comfort Systems USA, Group Maintenance America Corp., Roto-Rooter, Service Ex-perts and ServiceMaster.