Cape WA takeover spend hits $430m

UK-based industrial services company Cape plc’s local spending spree looks set to hit more than $430 million in the past few months after securing acceptance from the board of its latest target PCH Group Ltd.

Cape is expected to complete the PCH takeover after the Malaga-based scaffolding and form-work supplier accepted a sweetened $247 million offer.

Cape’s purchase of PCH follows recent deals to buy Kwinana company Total Corrosion Control for $85 million and Melbourne-based Concept Hire Ltd, which owns Balcatta’s Blackadder Scaffolding Services, for $101 million.

The latest deal creates a significant industrial services player in WA under Cape ownership, with a big focus on scaffolding in WA.

Before the acquisitions, Cape had more than 8,000 staff operating in 26 countries.

PCH employs more than 1,200 people worldwide in areas as far flung as the Middle East, Caspian Sea, Arabian Gulf and South East Asia.

TCC has about 700 staff, while Concept Hire’s workforce was not known.

Cape lifted its offer price for PCH by 10 cents earlier this week to $1.40 per share, which was enough to win the unanimous backing of PCH’s board.

The backing from PCH followed an independent report by KPMG Corporate Finance, which concluded that PCH’s control value was $1.34 to $1.49 per share and that the revised offer was fair and reasonable.

PCH, which is being advised by Gresham, has also agreed to pay a break fee of more than $2.5 million, equivalent to one per cent of the equity value of PCH, in the event that any director of PCH changes their recommendation or if a superior proposal is made for PCH which gains more than 50 per cent of PCH or board control.

Cape is being advised by Caliburn Partnership.

PCH’s board of directors, including managing director Jamie Cullen, intend to resign once Cape gains control of the Malaga-based company.

However, Cape chief executive Martin May said he expected the rest of PCH’s management team to remain with the company.

Mr May said the three businesses would be integrated over time, under the Cape name.

Victorian company Concept Hire last year paid $10.5 million for Blackadder, which was founded 10 years ago by Graeme Hearn, John Maddison and Joe Solomon.

Concept was also a listed company, while TCC was a family business, largely owned by the Iannello family.