Mining and drilling equipment and services provider Ausdrill will acquire specialist underground hard-rock contractor Barminco in a $270 million deal.
Ausdrill on August 15 announced it had entered into a binding agreement to acquire Barminco in exchange for 150.7 million fully paid ordinary ex-dividend Ausdrill shares and $25.4 million in cash – the equivalent to an equity acquisition price of $271.5 million.
When the transaction is complete, existing Barminco vendors will own roughly 22.1% of the enlarged Ausdrill business.
Barminco non-executive chairman Keith Gordon will join the Ausdrill board.
Ausdrill executive chairman Ian Cochrane said Barminco was a strong player in underground mining, and the acquisition would enable Ausdrill to diversify and broaden its service offering.
“The combination of surface and underground technical expertise will deliver a mining services business that provides a broad range of services required by our customers,” Cochrane said.
Barminco and Ausdrill have worked together at times in the past, including on the African joint venture AUMS, which provides a range of underground mining and mine management services.
“We also have a shared history in terms of our roots in the Goldfields of Western Australia,” Cochrane added.
Ausdrill chief executive Paul Muller said the two mining suppliers were “a great fit”.
“By bringing these two businesses together and creating Australia’s second largest mining services company, we will be able to provide a broader range of services four our customers and generate additional opportunities for our employees.”
Ausdrill made the acquisition announcement on the same day it revealed a 96% increase in net profit after tax in FY18, to $61 million.
The company is planning to conduct $250 million in equity raising to repay loans due late in 2019.