US-based drilling services contractor Boart Longyear Ltd has announced plans to raise up to $2.7 billion through its initial public offer on the ASX, after acquiring four Western Australian drilling firms in the past eight months.
US-based drilling services contractor Boart Longyear Ltd has announced plans to raise up to $2.7 billion through its initial public offer on the ASX, after acquiring four Western Australian drilling firms in the past eight months.
The company acquired Avatar Industries Ltd drilling subsidiary DrillCorp Ltd in August for $134 million, as well as drilling company Grimwood Davies, owned by Tim Goyder - the cousin of Wesfarmers' boss Richard Goyder, in January this year for an estimated $50 million to $100 million.
Boart also acquired WA-based North West Drilling from Graham Kluck Holdings and drilling rig manufacturer KWL, as well as two companies based in the Americas - Prosonic and Connors - between July 1, 2006 and January 31, 2007.
The company's initial public offer to retail and institutional investors will raise between $2.26 billion and $2.65 billion, with the indicative price range for the shares is $1.76 to $2.10.
After the IPO and listing, Boart expects to have a market capitalisation of $2.61 billion to $3.12 billion.
Boart chief executive Paul Brunner said the Asia Pacific region was very important to the business, representing over 25 per cent of the company's revenue, and with Australia the most significant country within the region.
"Listing on the ASX made a lot of sense given our presence in the region," he said.
Mr Brunner said growth through acquisitions was a key part of the company's strategy and it had a list of more than 100 potential targets.
"We have an awful lot of growth opportunities, I'm not going to go into great detail ... (but) acquisitions are the key part of what we do," he said.
"The company is pretty reserved about talking about its acquisitions simply because we are in a competitive market, we have people who are looking at the same opportunities we're looking at.
"Suffice to say that we have a longer list of well over 100 identified opportunities.
"In that list we would have anywhere between 10 and 15 at any given time that we are seriously thinking about.
"We would have one or two that we would be talking to at any given time to try and see if we can find any way we can do a deal."
"Ours is a fragmented industry and we believe that we can continue to benefit from further consolidation," he said.
The company was owned by mining giant Anglo American plc until two years ago, when it was sold to private equity investors.
Mr Brunner forecast strong demand ahead for drilling services and products.
"With the demand driven by China and India, and supply constraints becoming increasingly prevalent, we expect the strong growth in demand for drilling services and products in the mining industry to continue," he said.
Boart, which has a corporate office in Sydney, has over 100 years' industry experience and operates in about 30 countries worldwide and distributes its manufactured products to over 100 countries.
The drilling services contractor is forecast to generate pro forma revenue of about $1.86 billion and earnings before interest, tax, depreciation and amortisation of $406.7 million for the 2007 calendar year.
"Over the last two years we have moved the operational head office from Johannesburg, South Africa, to Salt Lake City, United States, rationalised 14 production facilities to 11 and implemented initiatives such as global account management and a centralised sourcing strategy," Mr Brunner said.
"These changes are starting to deliver results and these initiatives are expected to continue to drive growth in the medium term."
The retail offer will open to Australian and New Zealand investors on March 12 and will close on March 28.
The institutional offer will be made via a bookbuild and is scheduled to open on April 2 and close on April 3.
