Builder is sold amid LAPD project uproar
Perini Corp.’s deal this week to acquire affiliated construction outfit Tutor-Saliba Corp. for $862 million in stock is winning kudos on Wall Street even as controversy continues to swirl around a high-profile Tutor project: the new Los Angeles police headquarters.
Shares of Perini have climbed almost 5% since the construction company said Wednesday that it would acquire Sylmar-based Tutor. The stock rose 20 cents Friday to close at $40.06.
Tutor-Saliba is a private company that is majority owned by its chief executive, Ronald Tutor, who also is Perini’s chairman and chief executive. The companies said the deal was recommended by a special committee of independent directors of Perini, which is based in Framingham, Mass.
Tutor, who abstained from voting, will serve as chairman and CEO of the combined publicly held company.
Tutor-Saliba, founded 60 years ago, has a long and, at times, controversial history of involvement in Los Angeles public works projects. It was the only bidder in 2006 to build the new home for the Los Angeles Police Department, and its initial bid was $43 million over the city’s projected budget of $200 million.
This week, the city estimated that the cost of the new downtown headquarters had soared to more than $453 million and blamed the city’s engineering agency for failing to provide proper oversight of the project.
In 2006, Tutor-Saliba, Perini and another company agreed to pay $19 million to the city and county of San Francisco to settle a lawsuit alleging that the firms overbilled for work done on an expansion project at San Francisco International Airport and manipulated minority contracting laws.
Tutor-Saliba also has been involved in controversies surrounding transportation-related projects in Los Angeles.
Under the deal announced this week, shareholders of Tutor-Saliba will receive shares equal to about 45% of the common stock of Perini. The deal is expected to close in the third quarter, pending approval by Perini shareholders.
Research firm Morgan Joseph said the deal would enhance Perini’s profit margins and expand its reach into new geographic markets. Both companies have been active in Las Vegas, where Perini is the general contractor on the $3-billion Cosmopolitan Resort and Casino.
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