Urban-gro To Acquire Texas-Based Engineering Firm, DVO, Inc.

Urban-gro UGRO, has signed a binding letter of intent (LOI) to acquire Dawson Van Orden, Inc. (DVO), a world-class engineering firm with significant experience in indoor Controlled Environment Agriculture (CEA). Urban-gro is a services and design-build company that provides solutions to CEA and commercial sectors

According to a press release, "in addition to mechanical, electrical, and plumbing (“MEP”) engineering services, the acquisition of the 24-person, Texas-based firm will add fire protection engineering expertise and further urban-gro’s industrial architecture capabilities."

The enhancement of these offerings is expected to create new opportunities as well as build upon DVO’s existing contracts and clients in the indoor CEA and industrial sectors.

“The addition of DVO represents an extraordinary opportunity to add depth and breadth to indoor CEA engineering expertise to our professional services offering,” said Bradley Nattrass, chairman and CEO of urban-gro.

“While this accretive and synergistic transaction increases our professional services revenues and margins along with future opportunities to leverage their existing clients, it also immediately adds a deep bench of talent and an engineering leadership structure to scale and meet the rising demand for our turnkey design-build solutions.” 

The company will also fund the $7.25 million transaction, which includes a contingent consideration of up to $1.1 million to be paid in cash or equity at the company’s discretion, through a combination of $1.3 million in cash, a seller’s note of $3.8 million paid out over four quarters and $1.1 million of UGRO common stock at a pre-set price of $4 per share.

"DVO generated approximately $5.5 million of revenue and greater than 20% EBITDA in the trailing twelve-month period that ended September 30, 2022," according to the press release.

The company expects to close the acquisition in the fourth quarter of 2022 with the acquisition being accretive to earnings in its current fiscal year.

Nattrass, who says he's excited about the opportunity to continue strengthening urban-gro's presence in Texas said "we expect the state to be an influential future business opportunity as cannabis legalization is considered.”

Price Action

UGRO stock was trading up 0.52% at $3.84 per share at the time of this writing.

Photo: Courtesy Of Joel Muniz On Unsplash