20/05/2009 - 06:45

AusGroup acquires Modern Access

20/05/2009 - 06:45

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Singapore-listed AusGroup expects to nearly double its order book after it agreed to buy scaffolding business Modern Access Services (MAS) for $15 million.

AusGroup acquires Modern Access

Singapore-listed AusGroup expects to nearly double its order book after it agreed to buy scaffolding business Modern Access Services (MAS) for $15 million.

AusGroup said it had entered into a condition agreement with MAS' joint venture owners including Modern Industries Holdings, Fiiksam and Modern Industries Australia.

Under the deal AusGroup, through its wholly owned subsidiary AusClad, will pay $10 million in cash and issue $5 million worth of shares to purchase MAS.

The acquisition will be funded through existing cash reserves and debt facilities, AusGroup said.

The acquisition is expected to be completed on May 25, and the combined entity will have an order book of $455 million.

AusGroup's order book currently stands at $252 million. The combined entity will have a pipeline of contracts for the next two to three years, AusGroup said.

Modern Access Services (MAS), incorporated in early 2008, currently has operations in Australia, Singapore and Thailand, country that AGL has no presence in.

The company's client list includes Woodside, ExxonMobil and Chinese outfit MCC Mining.
AGL chief executive John Sheridan said the company has been on the hunt for acquisitions for some time and the merger with MAS will provide customers with an integrated service.

"MAS and AGC are now better positioned to offer our clients a more integrated and streamlined service offering in both construction and asset support operations across the oil and gas and mineral resource markets," he said.

 

The full statement is pasted below:

AusGroup Limited, a specialist service provider to the natural resources sector, is pleased to announce that its wholly-owned subsidiary, Ausclad Group of Companies Limited has, on the May 19 2009, entered into a conditional sale and purchase agreement with Modern Industries Holdings Pty Ltd Fiiksam Pty Ltd Modern Industries Australia Pty Ltd ("MIA") and related parties to acquire 100% of the share capital of Modern Access Services Pty Ltd ("MAS") for a consideration of AUD$15 million.

MAS is primarily engaged in the provision of access services for construction and maintenance programs on major projects in the resources, oil and gas and industrial sectors.

Headquartered in Perth and incorporated on 21 January 2008 as a subsidiary of MIH, MAS has been awarded contracts in connection with major construction projects for companies including Woodside, Exxon Mobil and MCC Mining, and currently has operations in Australia, Singapore and Thailand.

The acquisition represents a strong strategic fit with the existing AGC business in Australia, whilst providing access for AGL to the Thailand market and enhanced group offerings in the Singapore market.

The strategic rationale is compelling:
Improved geographical diversification for the Group.

- more value-add for existing clients with a wider array of services and addition of new blue-chip company names to AusGroup's customer base throughout Asia;

Expanded order book - MAS has an order book for AUD$203 million and after the acquisition AusGroup's total order book will increase to AUD$455 million with a strong pipeline of contracts for the next two to three years;

The terms of the agreement will see the Group pay AUD$15M by way of A$10M cash and A$5M through the issue of new shares in the Group. Cash payments shall be funded from the Group's existing cash and debt facilities.
"For several quarters we have indicated a desire to pursue acquisition opportunities that meet our strict internal guidelines. The acquisition of MAS meets all of our criteria and provides a strong value proposition to our shareholders.
Whilst MAS has a short track record the management team of MAS is first class with a long and established resume of success in the profitable growth and development of access service companies in Australia and South East Asia. The order book MAS brings will ensure strong revenue and earnings contributions in the 09/10 and 10/11 financial years.

The strategic fit with AGL is compelling. In Australia AGC already provides access services on some maintenance related contracts.

In addition access services are utilized by AGC construction on all major resource development projects. MAS will allow AGC to offer an integrated access, construction, and asset maintenance service.

MAS and AGC are now better positioned to offer our clients a more integrated and streamlined service offering in both construction and asset support operations across the oil and gas and mineral resource markets in Western Australia, Singapore and Thailand.

We look forward to completing the acquisition, to welcoming the MAS team in to AusGroup and to getting on with the job of delivering satisfactory returns to our shareholders."
John Sheridan, CEO and Managing Director, AusGroup Limited

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