As infrastructure spending surges, Construction Partners, Inc., which focuses on construction and maintenance of roadways across six southeastern states, announced plans to acquire Asphalt Inc., LLC for $653 million.
Asphalt Inc. conducts business as Lone Star Paving and is an asphalt manufacturing and paving company operating in central Texas, “with 10 hot-mix asphalt plants, four aggregate facilities, and one liquid asphalt terminal supporting its operations,” according to the deal’s press release. These operations will be added to Construction Partners’ operations across the southeast – “publicly funded projects make up the majority of its business and include local and state roadways, interstate highways, airport runways and bridges.”
Breakdown of Infrastructure Bill Spending
Passed in November 2021, the Infrastructure Investment and Jobs Act promised $1.2 trillion “to rebuild roads and bridges, implement new and innovative transportation solutions, strengthen our supply chains, and create good-paying jobs nationwide.” It is touted as “single largest dedicated investment in American transportation infrastructure since the construction of the Interstate Highway System in the 1950s and 1960s.”
Of that $1.2 trillion, $550 billion is for new investments while the remaining is for previously planned maintenance and other projects. Spending commenced in 2022, with approximately $69.7 billion has already been spent by the end of fiscal year 2023. As of 2024, 56,000 specific projects and awards have been announced across all 50 states.
Other recent bills have also earmarked federal funds for infrastructure projects, including the:
- Inflation Reduction Act, which includes $370 billion for clean energy, public transportation, and battery supply chains;
- CHIPS and Science Act, which includes $280 billion tax credits and subsidies focused on chip and semi-conductor manufacturing; and
- American Rescue Plan, which allots $350 billion to local governments for infrastructure projects, though the majority of the funds has gone to cover operating deficits.
This month, the White House announced $62 billion in infrastructure funding for fiscal year 2025. As the following chart indicates there has been a 30% increase in public construction (blue line) and 40% growth in highway and street spending (green line). As of the start of Q2 2024, public construction spending accounted for 23% of all construction spending across the U.S., up from 19% in 2022. Construction Partners and Lone Star Paving hope to benefit further from this spending.
According to DealPulse’s M&A database, which harnesses both AI and attorneys to digest the granular deal points of publicly announced transactions, Construction Partners, Inc. is advised by law firm Haynes and Boone, LLP. Lone Star Paving is advised by ArentFox Schiff LLP and financial adviser Wells Fargo Securities, LLC.
