EMCOR acquires big facilities manager

NORWALK, CONN. EMCOR Group has purchased facilities maintenance firm Consolidated Engineering Services, a subsidiary of Archstone-Smith. CES provides an array of services including facilities management, operation and maintenance, mobile services, remote monitoring, technical consulting and diagnostic services, mission-critical support, and installation and support for building systems. Headquartered

NORWALK, CONN. —EMCOR Group has purchased facilities maintenance firm Consolidated Engineering Services, a subsidiary of Archstone-Smith. CES provides an array of services including facilities management, operation and maintenance, mobile services, remote monitoring, technical consulting and diagnostic services, mission-critical support, and installation and support for building systems.

Headquartered in Arlington, Va., CES employs 3,400 technical and service employees in more than 20 states in the Northeast, Midwest, Mid-Atlantic and Southeast regions. CES’ customer base includes clientele in the pharmaceutical, industrial, financial services and commercial markets as well as federal government agencies. CES provides its services to 9,500 facilities comprising 265 million sq. ft. of space.

CES currently generates $420 million in annual revenues. Senior management from CES will remain with the company.

CES began as the in-house maintenance operation of Washington-area landlord Charles E. Smith Co., the predecessor to Archstone-Smith. In the early 1990s, CES was organized as a separate operation in an effort to win facilities maintenance work from other building owners and real estate management companies.

Under the terms of the agreement, EMCOR Group will pay Archstone-Smith $178 million in cash.

The acquisition positions EMCOR Group in the expanding U.S. market for facilities services. It will significantly increase the proportion of the company’s revenues that are generated on a recurring basis, offsetting the cyclical nature of the company’s traditional construction business.

In addition, CES’ contracts with the federal and state governments establish EMCOR’s presence in the market for government facilities services, an opportunity the company intends to develop further.

“This transaction represents a major milestone in EMCOR’s operational strategy,” said Frank T. MacInnis, chairman and CEO of EMCOR Group. “Combined with our current operations, this acquisition makes EMCOR a leader in the facilities management field, with pro forma 2002 revenues from this sector of approximately $1 billion, or approximately 25% of EMCOR’s total business in 2002. The transaction also allows us to combine our EMCOR Facilities Services operations with CES’ broad-based facilities services operations and its marketing and management expertise, enhancing the potential of the combined business.

“The CES acquisition strengthens our capabilities, further diversifies our markets and expands our geographic reach. Going forward, we believe that the market for facilities services management continues to provide an excellent opportunity for growth that complements our presence in our traditional markets. We believe that more and more companies will outsource their facility management needs in order to allow them to focus on their core business, and we look forward to further leveraging this opportunity.”

UBS Warburg advised EMCOR on the transaction. EMCOR Group is a leader in mechanical and electrical construction services and facilities services.