MDU Resources' (MDU) Viesko Acquisition To Expand Business
Zacks Investment Research | Mar 05, 2019 07:40AM ET
MDU Resources Group, Inc. (NYSE:MDU) announced the acquisition of OR-based Viesko Redi-Mix, a ready-mix concrete supplier, which will enhance Knife River Corporation’s operations in Oregon. Also, the move will enable the expansion of Knife River into the growing markets of north Willamette Valley and Portland Metro.
Acquisition Strategy
The company is undertaking acquisitions to expand the operation of the construction materials subsidiary, Knife River. Since April 2018, this is the sixth acquisition that is aimed at expanding footprint.
In the fourth quarter of 2018, the Construction Materials business contributed 38% to total revenues. Moreover, in the fourth quarter, the construction materials business had a backlog of $706 million, up 45% from the prior-year quarter’s figure. The increase in backlog can be attributed to rise in construction projects based on customer demand. We expect the acquisitions and increasing backlogs to further boost earnings and revenues in the Construction Materials business.
What Lies Ahead?
MDU Resources believes that the overall economic growth and infrastructure spending will drive demand for construction materials and services. The company announced its long-term capital investment plan to spend $2.6 billion through the 2019-2023 period. It expects to spend 27.5% of the planned investment toward the construction materials and services segment. These investments and business expansions through acquisitions are likely to boost the Construction Materials business and will increase reliability of services.
Price Performance
MDU Resources Group, Inc. Price
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