ConDig (15-Feb18).  Civil contractor and construction materials producer Granite Construction Inc is to snap up contractor, water management and drilling service provider Layne Christensen Co in a stock-for-stock $565 million deal.

The Watsonville, California-based company said the proposed tie up has been unanimously approved by the board of directors of both companies and is expected to close in the second quarter of this year.

Under the terms of the deal, Layne shareholders will receive 0.270 Granite share for each Layne share owened, equal to a premium of 33% over the volume-weighted average prices for Granite and Layne shares over the past 90 trading days.

Granite is expecting the deal to boost adjusted per-share earnings and adjusted cash EPS in the first year after closing.

It said the deal will enhance its presence in the growing water infrastructure market, and generate about $600 million in water-related sales.

“This strategic transaction brings together two complementary organizations to create a platform for growth, delivering significant benefits for shareholders, employees, and customers,” said James H. Roberts, president and chief executive officer of Granite.

“With Layne’s expertise and leading water positions, Granite will advance its goal of becoming a full suite provider of construction and rehabilitation services for the water and wastewater market. With enhanced scale and capabilities, Granite will be better positioned to address the growing water and wastewater needs throughout the infrastructure lifecycle.”

In October, reported a 24% rise in profit in the third quarter of this year on higher revenue. The company posted net income of $46 million for the quarter ended September 30, up from $37.2 million in the same period last year.

It comes as revenue jumped 19.1% to $957.1 million compared with $803.9 million in the third quarter of 2016, while the total company project backlog was $4.23 billion, up 12.5% year-over-year.