Perini Corporation and Tutor-Saliba Corporation to Combine to Create One of the Leading Building and Civil Contractors
April 02 2008 - 4:56PM
Business Wire
Perini Corporation (NYSE:PCR) and privately-held Tutor-Saliba
Corporation today announced that they have signed a definitive
agreement to create the premier publicly-traded general contractor
in the United States and overseas. The combined company will have
enhanced size and scale, including a pro forma backlog at the end
of 2007 in excess of $9 billion and over $40 billion of targeted
projects. The combination also is expected to enhance Perini�s
growth prospects significantly by adding substantial management
capacity, client relationships and other resources to Perini�s
industry-leading position in the gaming and hospitality markets; by
integrating Tutor-Saliba�s highly successful civil construction
business with Perini�s civil segment to improve its profitability;
and by combining Tutor-Saliba�s successful construction business in
Guam with Perini�s PMSI segment to position the combined division
to benefit from significant anticipated government spending
overseas in the next several years. In addition, this transaction
will extend Perini�s geographic diversity, enhance its access to
surety bonding and strengthen its management team. The transaction,
which is expected to close during the third quarter of 2008, is
expected to be accretive to diluted earnings per share beginning in
the first full fiscal year of combined operations. Perini is
maintaining its existing guidance for fiscal 2008 of diluted
earnings per share of $3.50 to $3.75. It is now targeting fiscal
2009 revenue and diluted earnings per share in the range of $7.3 to
$7.8 billion and $4.00 to $4.20, respectively, and targeting
diluted earnings per share growth in 2010 of between 10% to 20%. A
Special Committee of four independent members of Perini�s Board of
Directors recommended the transaction to the full Board, which
determined that it is in the best interests of Perini shareholders
and recommends they vote in favor of it. Ronald N. Tutor, who is
Chairman and CEO of Perini and the principal shareholder of
Tutor-Saliba, abstained from the unanimous vote by the Perini
Board. As a condition of the agreement, Mr. Tutor committed to
retain 70% of the shares he will receive in this transaction for at
least five years after the closing of the transaction and will
serve as Chairman and CEO of the combined companies. Michael R.
Klein, Lead Director of Perini who chaired the Special Committee,
said: �This transaction significantly enhances the interests of
Perini shareholders. It combines, grows and diversifies the best
talent of two excellent companies, grows our backlog of booked and
targeted projects, and diversifies our reach into promising new
segments of the market. Perini has been a highly successful
company. Combining with Tutor-Saliba accelerates our growth
potential in ways that Perini would not achieve alone. Given our
more than 30-year history of successfully working closely with
Tutor-Saliba on joint venture projects, we are highly confident
that we can integrate the companies seamlessly. In addition, we are
securing the continuing leadership of Ron Tutor.� Mr. Tutor said,
�This transaction represents a major milestone in the histories of
both Perini and Tutor-Saliba. It completely aligns the common
business interests of both companies into a single, focused
competitor, and secures best-in-class management and operating
practices to enhance future growth and earnings for the benefit of
the shareholders of both companies. On a personal level, I am
excited to be Chairman and CEO of the combined business, in no
small part because I understand as well as anyone the opportunities
this transaction will create for Perini and its shareholders. As
testimony to my belief in the bright future of the business, I have
agreed to hold the significant majority of my equity interest �
which represents a substantial portion of my personal net worth �
in the combined companies for at least five years after the closing
of the transaction.� TERMS OF TRANSACTION The transaction has been
structured as a tax-free, all-stock merger. Under the agreement,
Tutor-Saliba shareholders will receive shares equal to
approximately 45% of the common stock of Perini in exchange for
their interests in Tutor-Saliba. The total transaction value will
be approximately $862�million based on Perini's closing price of
$38.10 on April 1, 2008, including assumed adjusted net cash of
Tutor-Saliba as of December 31, 2007. The shares of Perini
Corporation will continue to trade on The New York Stock Exchange.
Upon completion of the merger, the company�s Board of Directors
will be expanded to ten directors and will consist of a majority of
independent outside directors, after the addition of two new
outsiders by Perini and one new nominee by Tutor-Saliba. Mr. Tutor
also will have the right to nominate one additional director. Mr.
Tutor has agreed to new employment and shareholders agreements to
be effective upon closing. These agreements include provisions to
ensure his full-time and long-term focus on the combined company,
including requirements that he retain all of the shares he will
receive in this transaction for six months after the closing date
and retain 70% of those shares for at least five years after the
closing of the transaction. All of the shares Mr. Tutor will own
will be required to be voted to support directors proposed by the
Nominating Committee. On all other matters, Mr. Tutor has agreed
that he will vote only 20% of his shares at his own discretion and
that his remaining shares will be voted in the same proportion as
all other Perini shares are voted. The transaction is subject to
customary closing conditions, including the approval of Perini�s
shareholders and receipt of regulatory approvals. Perini and
Tutor-Saliba currently expect the transaction to close during the
third quarter of 2008. Until the transaction is completed, both
companies will continue to operate their businesses independently.
The annual meeting of Perini, previously anticipated for late May,
will be set for a date to allow the materials relating to the
proposed combination to be voted upon by Perini shareholders, along
with the usual annual meeting agenda. The timing of the meeting
will depend upon the timing of the receipt of regulatory approvals
for the transaction, including clearance from the Securities and
Exchange Commission. A TRANSFORMATIONAL TRANSACTION Upon completion
of the merger, the company will create the premier publicly-traded
general contractor in United States. With its strong presence in
the hospitality and gaming industry; strengthened civil public
works infrastructure platform in California, Florida, Nevada, the
Northeast and Mid-Atlantic; and established presence in the
emerging high-growth Guam market, the combined company is
well-positioned for improved operating margins and growth.
Additionally, the merger presents attractive synergy opportunities
that are expected to improve profit margins and provide greater
returns to its shareholders, including sharing best practices and
leveraging management resources, enhancing operating margin through
increased self-performance capabilities and bringing Perini�s PMSI
segment into Tutor-Saliba�s Guam operations. Perini, one of the
most versatile and successful general contractors in the country,
was founded 113 years ago as a small, civil works contractor. It is
known today for its hospitality and gaming projects, and for its
health care, sports, entertainment and educational expertise.
Perini also has had a large civil segment that specializes in
public works construction and the repair, replacement and
reconstruction of infrastructure, primarily in the northeastern and
mid-Atlantic United States. In addition, Perini�s PMSI business is
a leading U.S. government contractor with worldwide urgent response
and remote capabilities. Perini�s building construction projects,
both completed and ongoing, include The MGM CityCenter in Las Vegas
($5.6 billion); The Cosmopolitan Resort and Casino in Las Vegas
($1.8 billion); Mohegan Sun in Connecticut ($950 million); Foxwoods
Resort Casino expansion in Connecticut ($510 million); The Trump
International Hotel and Tower in Las Vegas ($380 million) and the
Gaylord National Resort and Convention Center in the Washington,
DC-area ($490 million). Perini�s civil construction projects
include portions of the Boston Central Artery/Tunnel project ($650
million); New Jersey Light Rail Transit ($142 million) and
rehabilitations of the Triborough, Williamsburg and Whitestone
bridges in the New York City area ($443 million). In addition,
Perini has started work on the Harold Structures mass transit
project in Queens, NY ($139 million) and express toll lanes along
Route 95 in Maryland ($87 million). Tutor-Saliba is a
privately-held company majority-owned by Mr. Tutor, who also serves
as the company�s Chairman and CEO. In its 60-year operating history
Tutor-Saliba also has become one of the largest and most successful
construction firms in the United States. Tutor-Saliba�s major
ongoing and completed building projects include the Las Vegas Wynn
Encore Hotel ($1.3 billion); the San Francisco International
Airport reconstruction ($1.1 billion); the UCLA Westwood Hospital
($537 million); Planet Hollywood Towers in Las Vegas ($490 million)
and the Los Angeles Police Headquarters building ($234 million).
Tutor-Saliba�s civil operations have a long, demonstrated history
of consistent profitability � evidenced by a 15% average gross
margin over the last 10 years � and focus on large, complex public
infrastructure construction, including highways, bridges, airports,
wastewater management facilities and mass transit systems. Current
ongoing domestic civil projects include the Los Angeles
International Airport Runway and Taxiway improvements ($266
million) and the I-80 San Francisco Bay Bridge West Approach ($248
million). Major completed domestic civil projects include the
Alameda California Corridor ($783 million); the Richmond/San Rafael
Bridge Retrofit ($762 million); and the B.A.R.T. subway addition in
San Francisco ($609 million). ADVISORS UBS Investment Bank acted as
financial advisor to the Special Committee and provided a fairness
opinion to the Special Committee on the terms of the transaction.
Legal advisors to Perini were Kirkland & Ellis LLP. Deutsche
Bank Securities Inc. acted as financial advisor to Tutor-Saliba.
Legal advisors to Tutor-Saliba were Latham & Watkins LLP.
CONFERENCE CALL DETAILS On Thursday, April 3, 2008, at 8:30 a.m.
ET, the management of Perini and Tutor-Saliba will host a joint
conference call to discuss the transaction. Participants should
dial into the call 10 minutes before the scheduled time using the
following numbers: Dial-in: 1-888-339-2688 Passcode: 79956306 The
international dial-in number is 1-617-847-3007, passcode 79956306.
A telephonic replay of the conference call will be available
starting at approximately 12:00 p.m. ET on April 3 and will be
available until April 17, 2008 by dialing 888-286-8010, passcode
23694575. The international dial-in number is 1-617-801-6888.
Slides and audio webcast: There will also be a live - and then
archived - webcast of the conference call, through the Perini
website (http://www.perini.com). Participants to the live webcast
should register on the Perini website approximately 10 minutes
prior to the start of the webcast. ABOUT PERINI Perini Corporation
is a provider of general contracting, construction management, and
design-build services to private clients and public agencies
worldwide. The company operates in three segments: Building, Civil,
and Management Services. Perini was incorporated in 1918 as a
successor to businesses that had been engaged in providing
construction services since 1894. Its common stock is listed on the
New York Stock Exchange (NYSE) where it trades under the symbol
PCR. Perini�s headquarters are in Framingham, Massachusetts, and it
has 12 other principal offices throughout the United States. For
more information about Perini, please go to our corporate website
www.perini.com. ABOUT TUTOR-SALIBA Tutor-Saliba is a provider of
self-performed construction services, concentrating on larger more
complex buildings in multiple markets and public infrastructure
construction projects ranging from $100m to $1bn or more in size.
Tutor-Saliba is organized into three segments: Domestic Building,
Domestic Civil, and International. The company is a leader in civil
infrastructure and commercial building construction with a
significant presence in Guam. For more information about
Tutor-Saliba, please go to our corporate website
[www.tutor-saliba.com]. FORWARD LOOKING STATEMENTS AND ADDITIONAL
INFORMATION This press release contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, including, but not limited to, statements relating to the
proposed business combination transaction between Perini and
Tutor-Saliba and the expected timing and completion of the
transaction. Words such as �anticipate,� �believe,� �plan,�
�estimate,� �expect,� �intend,� �will,� �should,� �may,� and other
similar expressions are intended to identify forward looking
statements. Such statements are based upon the current beliefs and
expectations of our management and involve a number of significant
risks and uncertainties, many of which are difficult to predict and
generally beyond the control of Perini and Tutor-Saliba. Actual
results may differ materially from the results anticipated in these
forward-looking statements. The following factors, among others,
could cause or contribute to such material differences: the ability
to obtain the approval of the transaction by Perini shareholders;
the ability to obtain governmental approvals of the transaction or
to satisfy other conditions to the transaction on the terms and
expected timeframe or at all; transaction costs; economic
conditions; the effects of disruption from the transaction making
it more difficult to maintain relationships with employees,
customers, other business partners or government entities; the
ability to realize the expected synergies resulting for the
transaction in the amounts or in the timeframe anticipated and the
ability to integrate Tutor-Saliba�s businesses into those of Perini
in a timely and cost-efficient manner. Additional factors that
could cause Perini�s and Tutor-Saliba�s results to differ
materially from those described in the forward-looking statements
can be found in the 2007 Annual Report on Form 10-K for the year
ended December 31, 2007 filed with the Securities and Exchange
Commission and in the proxy statement Perini intends to file with
the Securities and Exchange Commission and mail to Perini�s
shareholders with respect to the proposed transaction, each of
which are or will be available at the Securities and Exchange
Commission�s website (http://www.sec.gov) at no charge. This
communication is being made in respect of the proposed merger
transaction involving Perini and Tutor-Saliba. In connection with
the proposed transaction, Perini will file with the Securities and
Exchange Commission a proxy statement and will mail the proxy
statement to its shareholders. Shareholders are encouraged to read
the proxy statement regarding the proposed transaction when it
becomes available because it will contain important information.
Shareholders will be able to obtain a free copy of the proxy
statement, as well as other filings made by Perini regarding
Perini, Tutor-Saliba and the proposed transaction, without charge,
at the Securities and Exchange Commission�s Internet site
(http://www.sec.gov). These materials can also be obtained, when
available, without charge, by directing a request to Perini or to
Tutor-Saliba per the investor relations contact information below.
Perini, Tutor-Saliba and their respective directors and executive
officers and other persons may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction.
Information regarding Perini�s directors and executive officers is
available in Perini�s notice of annual meeting and proxy statement
for its most recent annual meeting and Perini�s Annual Report on
Form 10-K for the year ended December 31, 2007, which were filed
with the Securities and Exchange Commission on April 17, 2007 and
February 28, 2008, respectively. Other information regarding the
participants in the solicitation and a description of their direct
and indirect interests, by security holdings or otherwise, will be
contained in the proxy statement and other relevant materials to be
filed with the Securities and Exchange Commission. This
communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
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