Henderson-based engineering firm Civmec has moved to gain a foothold in the east coast defence shipbuilding industry by striking an agreement to purchase the projects division of private company Forgacs Engineering.
Henderson-based engineering firm Civmec has moved to gain a foothold in the east coast defence shipbuilding industry by striking an agreement to purchase the projects division of private company Forgacs Engineering.
Singapore-listed Civmec and the NSW-based target have inked a preliminary sales agreement, with the deal to create a specialist engineering company skilled at building and maintaining defence equipment.
The proposed acquisition includes a 17-hectare, purpose-built ship building site at Tomago, 14 kilometres from the Port of Newcastle, where the ice breaker Aurora Australis, HMAS Tobruk and hull sections of Collins class submarines were built.
Civmec chief executive Pat Tallon said the deal would extend its multi-disciplinary operations to the east coast and gain a long-established foothold in the defence shipbuilding industry.
It would also give Civmec the opportunity to acquire in-house submarine building and technical expertise.
Civmec said the final terms of the agreement were commercially sensitive and would be disclosed when the sale was finalised, expected next month, subject to stakeholder approval.
"While this is a long-term strategic investment for Civmec, it is not expected to have any material impact on the group's financial performance for the financial year," the company said.
In September, Civmec announced plans to diversify its business with the formation of a new defence division and expansion plans for its Henderson facilities, with the aim of being considered as the lead contractor appointed by the Commonwealth to design and build Australia’s defence submarines.
Forgacs chairman Peter Burgess said shareholders had decided to focus on the company's product division and exit the project delivery business, following the successful completion of its largest and most complex job - the ship module construction program for the Air Warfare Destroyer.
"This proposed transaction represents very good news for the Newcastle and Hunter region as Civmec will be using the Tomago shipyard facility as its east coast headquarters and intends to replicate their Western Australian capabilities at Tomago," Mr Burgess said.
He said details of the transaction were still being finalised but the current owners of the Forgacs business would hold a stake in Civmec.
The Forgacs business was founded by Hungarian refugee Stephen Forgacs in 1962. He passed away in 2012 leaving the business to his children Pam Farragher, Elizabeth Burgess and Stephen Forgacs (Jnr).
The deal is expected to be completed by next month.
