Sunday 20th Oct, 2019

Macmahon Holdings makes $48M takeover bid

Engineering contractor Macmahon Holdings has made a $48 million takeover offer for GBF Underground Mining.

The deal has been made official after ongoing market speculation in recent weeks. The company expects to complete the takeover in mid-August.

Macmahon will pay $48 million up front for the purchase, funded by cash and GBF’s finance lease debt, resulting in a small premium on GBF’s net tangible asset value.

In addition, Macmahon will also pay two potential earn-out payments worth a combined $53.5 million based on GBF’s performance in the 2020 and 2021 financial years.

The GBF brand and company personnel will be maintained following the transaction. GBF is expected to generate $180 million in revenue and see $20 million in earnings before interest, taxation, depreciation and amortisation (EBITDA) in the 2020 financial year.

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When combined, Macmahon and GBF’s underground tender opportunities amount to over $2.3 billion across 11 projects.

Macmahon Chief Executive Officer Michael Finnegan described GBF as a strategically compelling and financially attractive acquisition.

“With GBF we have the opportunity to achieve meaningful scale in our underground contracting business, which is a key pillar in our strategy of becoming a leading mining contractor that can service clients through the life cycle of their mining operations,” Finnegan said.

Gold explorer Orminex has announced that current GBF co-owner Michael Foulds would join the board of the company following the completion of the Macmahon deal.

Orminex Executive Chairman, Daryl Henthorn, said the addition of Macmahon’s capabilities through the deal would aid the company’s mineral ventures model, which is devoted to sourcing, developing and funding high-grade gold assets.

“We now have the potential to seek to leverage Macmahon’s extensive surface mining capabilities to open up a pipeline of new projects that Orminex can evaluate and pursue under our mineral ventures model,” Henthorn said.

“In addition to our current underground mining operations, we are now able to consider expanding our portfolio to incorporate surface mining, opening up the market for the mineral ventures model.”