- Boxwood Merger and Atlas Intermediate Holdings announced it is merging as part of a $709.5 million deal. These are the details you should know.
Boxwood Merger Corp. (a publicly-traded special purpose acquisition company) and Atlas Intermediate Holdings LLC (a leading provider of professional testing, inspection, engineering, and consulting services) recently announced that they have entered into a definitive agreement where Atlas will become a wholly-owned indirect subsidiary of Boxwood.
Atlas is currently a portfolio company of Bernhard Capital Partners. And the new company will be well-positioned to benefit from favorable tailwinds, including the growing need to inspect, service, repair, and invest in U.S. infrastructure.
Following the proposed transaction, Boxwood intends to change its name to Atlas Technical Consultants and its shares of Class A common stock are expected to continue to be listed on The Nasdaq Stock Market under the ticker symbol “ATCX.” Bernhard Capital and the Atlas management team will retain a significant equity stake in Atlas Technical at the closing of the proposed transaction.
Launched in Austin, Texas, Atlas provides mission-critical technical services that help its public and private sector clients test, inspect, certify, plan, design and manage a wide variety of projects across the transportation, commercial, industrial, government, education, and other nonresidential markets.
And Atlas serves as a trusted advisor to its clients — which include government agencies, quasi-public entities, schools, hospitals, utilities, and airports, as well as private sector clients across a variety of industries. About 95% of Atlas’ revenues are generated from clients that have tenures longer than 10 years.
Atlas’ testing, inspection, and quality assurance require a high degree of technical expertise as clients rely on Atlas to ensure that their structures are designed, engineered, built, and maintained in accordance with building codes, regulations, and the highest quality standards. And Atlas’ highly technical infrastructure services are delivered through a nationwide footprint as its approximately 2,100 highly-skilled, technical staff of scientists, engineers, inspectors, and other field experts operate from over 140 offices located across 40 states.
Since launching, Atlas has strategically expanded its footprint and capabilities through acquisitions of national and large regional technical service companies. This includes the acquisitions of PaveTex Engineering (specializing in materials engineering and testing, quality control testing, and construction quality assurance), Moreland Altobelli Associates (a full-service engineering, design and program management firm), Engineering Testing Services (a provider of innovative quality control testing and inspection solutions for construction material manufacturers), and its most recent combination with ATC Group Services (a leading integrated environmental engineering consulting firm with more than 40 years of experience).
Following the closing of the proposed transaction, the company will be led by Atlas’ management team, including CEO L. Joe Boyer and CFO Walter Powell — who will continue to serve in their respective roles. Boyer has more than 30 years of experience in the technical services industry and Powell has over 25 years of financial and audit expertise in both public and private companies. Stephen Kadenacy — the Chairman and CEO of Boxwood — will become Atlas’ Executive Chairman upon the closing of the transaction.
“Atlas is precisely the kind of company that we were looking for since our IPO,” added Kadenacy. “It’s a high margin, low risk, pure technical services company with a national platform, serving a diverse base of clients with long-standing relationships. Atlas has a recurring and contracted revenue base derived mostly from non-discretionary testing and inspection projects required by regulatory agencies, and is strategically positioned to benefit from the growing need to service, repair and rebuild the nation’s aging infrastructure. We expect to deliver both organic and acquisitive growth while continuing the best-in-class cash flow performance that Atlas has achieved since its inception. Additionally, this is a 95% time and materials and cost-plus business with a multi-year backlog that provides exceptional visibility into its growth trajectory. We believe Atlas exhibits all of the key factors central to our strategy.”
This transaction reflects an implied enterprise value at closing of $709.5 million for the company based on the current assumptions excluding the net present value of an anticipated tax benefit of $55 million.
Bernhard Capital and the Atlas management team will remain investors by rolling over significant equity into the company. Greenhill & Co. and Macquarie Capital are acting as financial advisors to Boxwood and BofA Merrill Lynch, Morgan Stanley, Macquarie Capital, and Helena Capital Advisors are acting as capital markets advisors to Boxwood. Boxwood secured committed debt financing for the transaction from Macquarie Capital and Natixis. And Winston & Strawn LLP and Atrium LLP are serving as legal advisors to Boxwood and Kirkland & Ellis LLP is acting as legal advisor to Atlas.
“This transaction directly aligns with our intention to enter the public markets as we look to realize the full growth potential of our purpose-built platform,” explained Boyer. “We are proud to partner with Boxwood at this unique inflection point in the evolution of our company as we capitalize on our multi-pronged growth strategy to expand our market share and become the preferred provider of professional and technical services in our industry. We look forward to further extending the reach of our platform by cross-selling our diverse set of services to existing customers while attracting new customers through our enhanced platform of capabilities.”
