Oct 13 2009
MFRI, Inc. (NASDAQ: MFRI) Today, MFRI announced the formation of a new joint venture, Bayou Perma-Pipe Canada Ltd., a partnership between the Bayou Companies, Inc., (a subsidiary of Insituform Technologies, Inc., NASDAQ: INSU) and Perma-Pipe, Inc., (a subsidiary of MFRI, Inc.). Bayou Perma-Pipe Canada Ltd. has reached an agreement with Garneau, Inc. to acquire Garneau’s Camrose pipe coating and insulating facilities in Alberta, Canada for $12.25M (CAN). The transaction is subject to approval by Garneau’s shareholders and other customary conditions.
With over 40 years of operating experience, Garneau has developed significant expertise and innovative technology in their pipe coating and insulating processes. The Camrose facility, constructed in 1997, was upgraded in 2007 and includes over 75,000 square feet of space on a 128 acre site. Garneau’s shareholders are expected to vote on October 28, 2009 and the closing is expected to occur shortly thereafter. The agreement has been approved by its Board of Directors. This new joint venture company, Bayou Perma-Pipe Canada, Ltd., should have only a minor impact on MFRI earnings for the current fiscal year and is anticipated to be accretive in 2010 (Fiscal Year Ending 1/31/2011).
Bayou, Perma-Pipe’s joint-venture partner, has the largest pipe coating and logistics facility on the United States gulf coast. Bayou and Perma-Pipe along with Cumming Corporation have been partners in Bayou Flow Technologies (“BFT”) for almost 10 years. BFT markets subsea flow assurance products and services to the oil companies operating in the Gulf of Mexico.
Fati Elgendy, president of Perma-Pipe said, “This investment is a strategic step for our Company. Participating in a coating and insulating facility in Western Canada allows us to better serve our customers in the oil sands and other Canadian energy developments.”
Brad Mautner, President of MFRI said, “Our long history with Bayou has been very successful. We have demonstrated that joining our experience together to supply high quality coating and insulation solutions provides excellent value to our customers. Bringing these skills closer to the Canadian market significantly improves this value proposition.”