Knife River Corporation (NYSE: KNF) announced today that it has completed its previously announced acquisition of Strata Corporation, a leading construction materials and contracting services provider in North Dakota and northwestern Minnesota. The purchase price was $454 million, reflecting a multiple of approximately 9 times Strata’s projected 2025 EBITDA.
Strata is an aggregates-led, vertically integrated company that employs over 900 team members during peak construction season. The transaction included:
- Well over 30 years of aggregate reserves for Strata’s operations. Its aggregates support its downstream products and services, as well as third-party sales. In 2024, Strata sold approximately 3 million tons of aggregates. In addition to its trucking fleet, Strata owns seven locomotives and over 400 railcars to deliver aggregates to market at eight strategically located rail distribution yards.
- 28 ready-mix plants and approximately 120 ready-mix trucks. Strata’s ready-mix operations specialize in high-specification concrete for commercial, industrial, residential and public work.
- Three asphalt plants that provide material for Strata’s internal contracting services division. Its asphalt is primarily used for public paving work, including airports, highways and streets.
- A contracting services division that performs asphalt paving and concrete construction, specializing in technical and higher-specification work. Having an internal source of high-quality materials in strategic locations provides Strata the opportunity to optimize margins.
- A highly skilled and respected team, including Strata President Paddy Murphy, who was appointed president of Knife River’s North Dakota operations in connection with the closing of the acquisition. Prior to Strata, Murphy was a general manager for Holcim.
“We’re excited to welcome Strata to the Knife River family of companies as we continue to execute on our Competitive EDGE plan to profitably grow our business,” said Knife River President and CEO Brian Gray. “Strata provides infill growth in our Central Region, along with access to new markets, and we expect it will be accretive to Knife River’s Adjusted EBITDA margin within the first year.
“Strata is a well-run, well-respected company,” Gray said. “We are already in the process of integrating its operations and look forward to profitable returns from this acquisition in 2025 and beyond.”
“Knife River and Strata have similar cultures, with similar business models, and we are excited to have joined their team,” Murphy said. “We expect that Knife River’s EDGE strategy, procurement synergies and internal efficiencies, combined with Strata’s operational platform, will have a positive and immediate impact on the Central Region.”
Knife River intends to update its consolidated 2025 financial guidance when it issues its first quarter 2025 earnings results. In addition to cash on hand, Knife River used a portion of the proceeds from the issuance of a Term Loan B in the amount of $500 million to finance the acquisition. In connection with the closing and as anticipated, Knife River sold certain assets of Strata that were immaterial to the transaction and that do not impact Knife River’s projections for Strata’s performance.
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