Admiral Acquisition pre-empted a formal auction process to acquire American Securities-backed Acuren, Michael Sand, a managing director at the private equity firm, told Mergermarket.

Admiral, a UK-listed special purpose acquisition vehicle (SPAC), announced a deal to acquire the industrial provider on 22 May in a USD 1.85bn deal, representing the largest blank deal of the year so far.

A sale process for Acuren, run by investment banks Baird and Harris Williams, had kicked off last month, attracting a number of potential buyers, according to a source familiar with the deal. Admiral had started informal talks with Acuren as early as February and swooped in with its offer for the business ahead of an early June deadline for first-round bids, the source said.

The SPAC co-launched by serial dealmaker Martin Franklin raised USD 550m from a listing on the London Stock Exchange in May 2023 – the largest IPO that the UK had seen year-to-date at the time –on the condition that it would purchase a company within two years. Jefferies and UBS advised on the share offering. Franklin has spearheaded a number of London-listed SPACs over the years including Nomad and Platform Acquisition.

“It was a pleasure to work with Martin Franklin and everyone on the Admiral team.  American Securities has a long-standing relationship with Martin, and we were aware of the Admiral team’s successful track record acquiring similar businesses with a similar structure,” said Sand.

SPACs have struggled to raise capital on both sides of the Atlantic since the investment vehicles’ heyday in 2020 and 2021, US bourses so far have seen 10 SPACs worth USD 1.4bn compared to USD 3.8bn in the whole of 2023 and USD 13.4bn in 2022, according to Mergermarket data.

Still, Admiral’s position presented advantages because UK SPACs are not subject to the same regulatory rules as in the US, such as requiring a shareholder vote in the event of a potential deal.

“As a UK SPAC, Admiral provided a similar level of speed and certainty as selling to a private equity firm. We were not required to roll over equity, Admiral provided fully committed equity and debt financing at signing, and the transaction was not subject to a shareholder vote post-signing,” said Sand.

Dual-headquartered in Austin, Texas and Edmonton, Alberta, Acuren offers a variety of services to support industrial safety, from testing lab equipment to the inspection and maintenance of ropes used to scale buildings.

Since acquiring Acuren in 2019, American Securities has increased the company’s EBITDA by 90%, said Sand, half of which came from organic growth and the other half from a series of 12 strategic add-on acquisitions. Acuren has expected 2024 estimated adjusted EBITDA of around USD 190m, according to a deal announcement, with the USD 1.85bn transaction value reflecting a multiple of around 9.7x.

Among the most high-growth add-ons was Acuren’s 2021 purchase of Baton Rouge, Louisiana-based Premium Inspection and Testing Group from Ninth Street Capital Partners, which brought with it a number of non-destructive testing and inspection capabilities across the petrochemical, refining, food processing, and energy sectors.

The transaction, expected to close in the third quarter of 2024, will see Admiral move its listing to New York and cease trading on the London Stock Exchange.