Low global prices for oil and gas are forcing a major infrastructure services provider to rely more on other markets, including PVC pipe systems for water.
Aegion Corp. is boosting its vinyl pipe services profile with the acquisition of Underground Solutions Inc.
Underground Solutions, based in Poway, Calif., specializes in water and wastewater technologies, including its Fusible PVC product line of PVC piping and patented pipe-fusion process. It uses the technologies in new pipelines and in rehabilitation projects and claims the technology allows installation of a continuous, monolithic, gasket-free PVC pipe or conduit from 4 inches to 36 inches in diameter. Underground Solutions also supplies Duraliner PVC pipe for insertion into existing pipe and ServiceGuard composite pipe made of chlorinated PVC inner and outer layers with an aluminum layer in the middle.
Aegion runs several subsidiaries that provide infrastructure protection and maintenance. One of the subsidiaries, Fyfe, provides fiber-reinforced polymer systems to repair and strengthen pipelines and building structures. Aegion's services include pipeline corrosion protection.
“The acquisition of Underground Solutions is an important step to advance our stated strategic objective to expand our presence in the growing pressure pipe rehabilitation market in North America,” noted Aegion President and CEO Charles Gordon in a news release issued by the St. Louis company.
Aegion is taking several steps to ensure future growth as it faces a drastic downturn in oil and gas infrastructure business, a result of persistent low global prices for the hydrocarbons. Besides the Underground Solutions acquisition, Aegion is expanding its international rights through agreements with Fife Group LLC, divesting its interest in Corrosion Protection's Canadian pipe-coating joint venture, cutting back on Energy Services' operations in central California and reducing operating expenses in all of its businesses.
Aegion paid $85 million in cash for the Underground Solutions business in the Jan. 4 deal. It expects to finalize the purchase in the first quarter of 2016.
“Our market research suggests assembling a portfolio of technologies is the right strategy to establish a leading position in the North American pipe rehabilitation market,” Gordon added. With the acquisition, Aegion will be able to provide more options for infrastructure protection and maintenance.
This year will be a tougher one for Aegion's business in North American energy markets as customers cut capital spending in a low oil-price environment. Aegion expects its Energy Services segment to lose $70 million in sales this year. The Underground Solutions purchase and other initiatives will put more of the company's emphasis on water-related activity. The company uses integrated professional services in engineering, procurement, construction and maintenance to protect and strengthen energy, water and mining piping systems,