Santa Monica-based investment fund Boxwood Merger Corp., which raised $200 million in a public offering in November, has purchased an Austin, Texas-based professional and technical services business that could capture future federal dollars for infrastructure development.
The proposed transaction, which is expected to be completed by Dec. 31, reflects an enterprise value at closing of $709.5 million for the company. Boxwood's target, Atlas Intermediate Holdings, is a privately held professional testing, inspection, engineering and consulting services business.
Boxwood, a special purpose acquisition company — or SPAC — is led by Stephen Kadenacy, former chief operating officer of Century City-based engineering giant AECOM. Kadenacy will become chairman of Atlas as part of the deal.
SPACs merge with or acquire other businesses in order to take them public. Immediately following the transaction, Boxwood intends to change its name to Atlas Technical Consultants Inc. with its shares expected to be listed on the Nasdaq Stock Market under the ticker symbol ATCX.
Boxwood Chief Financial Officer Daniel Esters said that the plan is to pursue smaller acquisitions to bolt-on to Atlas. “We are intending for this to be the acquisition platform. The company has a number of M&A (mergers and acquisitions) in the pipeline. We see ourselves building this out into a national platform,” Esters said. “We see tremendous opportunity."
Atlas Intermediate Holdings is well-positioned to benefit from a recently proposed $287 billion federal highway bill that would inspect and repair the nation’s roads and bridges, Esters said.
Atlas, which serves clients such as schools, hospitals, utilities and airports, also sees big growth opportunities among local governments and at least 45 states that have raised fees or taxes to fund infrastructure investment over the past five years, Esters observed. “It’s clearly part of the story at Atlas.”
Atlas is currently a portfolio company of Baton Rouge, La.-based private equity firm Bernhard Capital Partners. Bernhard and the Atlas management team will retain a significant equity stake in Atlas Technical at the closing of the proposed transaction.
Private equity firms have an appetite to partner with SPACs like Boxwood because they are cash rich, Kadenacy said in a November interview. He noted at the time that Australia’s Macquarie Capital owns half of his company’s shares.
Los Angeles has seen a flurry of SPAC offerings in recent years by private equity shops, alternative asset managers and other investment firms looking to purchase companies and take them public.
The trend has continued in 2019 with three outfits raising funds through initial public offerings. That trio of offerings has raised some $750 million for deals, and accounted for about one-fifth of all money raised by U.S.-based SPACs in IPOs this year, according to regulatory filings.
Finance reporter Pat Maio can be reached at email@example.com or (323) 556-8329. Follow him on Twitter @patmaio.
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