Story
Energy Services of America Shares Drop 5% on $6.95 Million Acquisition Plan
Summary
The utility services company announced an agreement to purchase West Virginia-based contractor FAMCO, Inc. in a cash-and-stock deal, prompting a decline in its share price during after-hours trading.
Shares of Energy Services of America Corp. (NASDAQ:ESOA) fell 5% in after-hours trading Thursday after the company announced it had entered into an agreement to acquire utility contractor FAMCO, Inc. for a base price of $6.95 million.
Acquisition Details
Energy Services of America disclosed it signed an Asset Purchase Agreement to acquire nearly all operating assets of FAMCO, a West Virginia-based contractor specializing in water and sewer infrastructure. The transaction is expected to close on or about October 9, 2026, pending customary closing conditions.
The payment structure for the $6.95 million base price, which is subject to adjustments, is composed of cash and stock:
- Three-eighths of the price will be paid in cash at closing.
- One-half will be paid in Energy Services of America common stock issued after the closing.
- The remaining one-eighth will be withheld for a post-closing true-up adjustment.
Strategic Rationale
AdThe acquisition is intended to bolster Energy Services' existing water and utility construction operations. According to the announcement, FAMCO brings an established workforce, equipment fleet, customer base, and a significant contract backlog.
"FAMCO brings experienced people, equipment and customer relationships that complement our existing operations and further strengthen our capabilities in water and utility construction," said Douglas Reynolds, President of Energy Services of America. The company, headquartered in Huntington, West Virginia, serves customers in the natural gas, petroleum, and power industries across the mid-Atlantic and Central U.S.
Market Impact
The negative investor reaction, reflected in the 5% after-hours stock drop, is a common response to acquisition announcements, particularly those involving stock issuance. Such deals can dilute the value of existing shares, and investors may also be weighing the integration risks and the price paid for the new assets.
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