BauMart buys Eco Pallets

A Perth-based company that supplies building products and materials has grown its business with the acquisition of a local competitor in an all-scrip deal.

ASX-listed BauMart Holdings has purchased Eco Pallets, a Perth-headquartered company that specialises in the supply of plastic materials handling products, in exchange for 8 million shares.

At BauMart’s last closing price of 20 cents a share, the deal is worth $1.6 million.

The acquisition will boost both BauMart’s product offering and its customer base, with the company to take over Eco Pallets’ 1,000 customer accounts, including those located in the eastern states.

Eco Pallets also owns warehouses in Sydney and Melbourne.

The acquisition will diversify BauMart’s range of products by incorporating Eco Pallets’ plastic-oriented products to its line of natural stone and specialised glass selections.

Eco Pallets achieved revenue of about $1.5 million in the 2015 financial year; by comparison, BauMart’s revenue for the six months to December 2015 was just shy of $540,000.

“The acquisition is expected to generate considerable synergies in terms of overheads, procurement, logistics, distribution and human resources that should provide additional sales and increased earnings,” BauMart said in a statement.

BauMart shares were unchanged at 20 cents each at 11:30am.