Infrastructure construction company Southland Holdings and Legato Merger II today announced that they have signed a definitive agreement for a business combination, which would result in Southland becoming a direct wholly-owned subsidiary of Legato II. The merged company would have an implied pro forma enterprise value of $810 million.
As a wholly-owned subsidiary, Southland will continue to execute its growth strategies under the leadership of Southland’s current management. Legato II’s board will include five directors designated by Southland and two directors designated by Legato II.
Southland’s shareholders will receive a combination of up to $498 million in cash and stock. The transaction is expected to add $220 million of cash to Southland’s balance sheet (without taking into account any redemptions of Legato public shares).
Southland’s existing shareholders will receive $343 million of Legato II common stock and $50 million in cash at closing. In addition, Southland’s existing holders may receive an additional 10.3 million shares of Legato II common stock valued at $105 million, contingent upon achievement of specified Adjusted EBITDA targets for calendar years 2022 and 2023.
Following completion of the transaction, and assuming all of the contingent consideration is paid and without taking into account any redemptions, Southland’s current holders and management team will hold approximately 55% of Legato II’s outstanding common stock and Legato II’s current stockholders will hold approximately 45%.
Southland provides specialized infrastructure construction services across North America including bridges, tunneling, transportation and facilities, marine, hydroelectric structures, water and sewer treatment, and water pipeline end markets. Read more.
