NSW-based steel player Bradken has announced its acquisition of the Wundowie Foundry Pty Ltd in Western Australia for $8 million to be paid from current facilities.
NSW-based steel player Bradken has announced its acquisition of the Wundowie Foundry Pty Ltd in Western Australia for $8 million to be paid from current facilities.
Wundie is jointly owned by interests associated with Bill Pearce and Richard Reid.
Commenting on the acquisition, Bradken managing director, Mr Brian Hodges said: "We are pleased to have acquired this business, which is an excellent fit with our strategic direction and will increase our consumable product sales. The acquisition will be EPS accretive in the first year."
"The Wundowie foundry business, which is located near Perth, produces a range of iron and steel castings, with an emphasis on wear resistant consumable products used in the mining industry in Australia and overseas. We see the site as ideal for the long-term development of Bradken products and are pleased to have acquired such a product-focused facility and skilled workforce."
"Wundowie's range of smaller consumable products will enhance Bradken's existing range of differentiated products, which are customised in-house for a variety of applications throughout the resources sector. With Wundowie's reputation for reliability, quality and innovative design, these products will expand Bradken's extensive intellectual property portfolio."
As a complementary acquisition, Bradken is looking forward to combining the strengths of both businesses and will work on capturing the synergies available from the purchase. "We anticipate using available surplus capacity by relocating some existing production and equipment to Wundowie," Mr Hodges said.
Bradken is also pleased to announce that it has reached agreement with Castle Harlan, Inc., a US based middle market private equity firm, to join with them to acquire AmeriCast Technologies, Inc. Bradken will hold approximately 20% of the equity, at a cost of approximately A$8 million, funded from current facilities. The total transaction is valued at US$110 million.
"AmeriCast is a North American steel foundry group with sales of over US$200 million. The business has a leading market share of the large (over 5,000 kilograms) North American steel castings market, supplying major mining and rail customers. AmeriCast's Atchison foundry in Kansas holds a key strategic position in this market, producing products for major customers including GE, GMD and Caterpillar. The business possesses strong and unique technical skills," said Mr Hodges.
Bradken's contribution will include input on strategic direction and value added strategy and product development with Mr Hodges joining the board. "There will be no effect on Bradken's profit and loss initially, but it will be an excellent investment with good visibility and long-term potential," said Mr Hodges.
Bradken is also upgrading its guidance to 20% plus EBITDA growth for FY07 in light of the first four months trading and the Wundowie foundry acquisition. Bradken is continuing to work on other opportunities and more information should be available by the half year results announcement.
