July 7, 2017
Haven’t had much to email about lately, so to sustain interest, here is an acquisition that was announced today by one of my favourite companies, Logistec:
Sanexan, owned by Logistec, provides a variety of environmental services, much like Stantec, but one of their crown jewels is called Aqua-Pipe, which is a patented technology that is an incredibly economical method to restore old water pipelines, rather than the traditional method of replacing them entirely (check it out here). This is the primary reason I am so excited about this company (alongside Stantec, who recently acquired MWH Global, a global water infrastructure leader), because the U.S. in particular has a plethora of aging water infrastructure that is going to need to be replaced in the next twenty years to the tune of $298 BILLION.
As mentioned in the above news release, Logistec has now also acquired FER-PAL, which will from now on exclusively market Sanexan’s products and services, including Aqua-Pipe. Moreover, this will reduce costs for every party, including customers, because Logistec has essentially bought out the middle man. Another very successful company called Stella-Jones (another of my favourites), has also acquired companies in this manner numerous times, and it has led to very profitable returns for shareholders (~30% per year over the past 5 years).
As mentioned in this news release, acquisitions like these are built up through years of good business relations, and that is what has led to both Stella-Jones and Logistec being so successful.
The craziest part of all, is that environmental services isn’t even Logistec’s primary business right now (although the fastest growing); Logistec is primarily known for their marine services which consists of stevedoring and other cargo handling services (ie. operating shipping ports), through numerous ports along the east coast of North America. This provides fairly consistent revenue, and both of these industries (marine and environmental) are highly fragmented, lending to many acquisition opportunities.
Happy Friday and have a great weekend!
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