Perth-based small-medium enterprise investor Greencap Ltd is set to bolster its reach in South Australia and the Northern Territory after agreeing to acquire Adelaide consultancy AEC Environmental Pty Ltd for $3.8 million.
Perth-based small-medium enterprise investor Greencap Ltd is set to bolster its reach in South Australia and the Northern Territory after agreeing to acquire Adelaide consultancy AEC Environmental Pty Ltd for $3.8 million.
Under the agreement, Greencap will issue $1.75 million worth of its shares to AEC and the balance will be made in cash funded from the company's existing cash reserves and approved debt facility.
Greencap said AEC's three executive owners, John Todd, Steve Kirsanovs and Nick Waniarcha will stay on while all existing AEC staff will be offered continued employment.
AEC non-executive director Philip Beaton will not be involved with AEC after completion of the purchase.
AEC provides consultancy services in the evaluation of land and asbestos contamination and has an annual turnover of about $3.6 million.
Completion of the acquisition is expected next month.
Below is the full announcement:
Greencap Limited (ASX:GCG) today announced it had signed an agreement to purchase the Adelaide based business of AEC Environmental Pty Ltd ("AEC") for approximately $3.8 million split 50% cash and 50% shares in Greencap. Completion is expected in August 2008.
Upon completion the acquisition will be immediately earnings per share accretive for Greencap.
Greencap Managing Director, Jeffrey Broun, stated that "AEC is a very strategic acquisition for Greencap as it extends our geographic reach, enlarges our depth of environmental auditor expertise and diversifies our client portfolio particularly in South Australia and the Northern Territory.
Of the four current owners of AEC, three are full time executives of AEC who will remain with AEC to continue to drive the growth of AEC over the long term. One of the continuing executives, Mr Steve Kirsanovs, is an Environmental Auditor (Contaminated Land) certified by the Victorian Environmental Protection Authority. This has assisted the company to expand into the environmental audit area.
Transaction summary
- Purchase price approx $3.8 million, being $3.5 million for goodwill (paid as to 50% cash and 50% in Greencap shares being 8,750,000 to be issued at 20 cents per share) and plant, equipment and stock approx $300,000 (payable in cash);
- The shares issued will be fully paid ordinary shares ranking equally with Greencap's existing issued shares. They will be subject to voluntary escrow in four releases i.e. 30% 12 months from issue, 30% 18 months from issue, 30% 24 months from issue and the balance 30 months from issue. The shares will be issued within Greencap's 15% capacity to issue shares without shareholder approval;
- The AEC assets are being acquired by a new subsidiary company of Greencap to be named AEC Environmental Pty Ltd at completion;
- The acquisition is to be funded from existing cash reserves and Greencap's approved debt facility;
- The three executive owners (Mr John Todd, Mr Steve Kirsanovs and Mr Nick Waniarcha) will continue to manage the business under three year Executive Service Agreements at normal commercial salaries. The other vendor, Mr Philip Beaton is currently a non-executive director of AEC and will not be involved with AEC after completion of the purchase;
- AEC will continue to operate from the AEC head office at 12 Greenhill Road, Wayville, South Australia. All of AEC's existing 30 employees will be offered continued employment on existing terms and entitlements.
- Completion is subject to satisfaction or waiver of customary conditions which are within the control of the parties or are otherwise not expected to delay completion.
Business Summary
AEC Environmental Pty Ltd is a leading consultancy in the evaluation of land and asbestos contamination, with a current annual turnover of approx $3.6 million and FY09 EBIT expectation of $765,000.
The company was founded in 1993 as Asbestos Registration Services by engineer John Todd and property consultant Philip Beaton. Mr Todd is AEC's Managing Director, while property consultant Mr. Beaton is a non-executive Director. Environmental engineer, Mr Steve Kirsanovs, joined the company in 1997 bringing to it many years of professional experience gained through working on major construction, site assessment and remedial projects around Australia. Mr Waniarcha joined AEC eight years ago and is the senior environmental engineer.
In 1997 there was a name change to Adelaide Environmental Consulting, and in 2005 became AEC Environmental Pty Ltd, better reflecting its work and sphere of operations and demonstrating that the company operates well beyond the confines of Adelaide.
Over the past 15 years AEC has grown significantly to become a mid-level company employing more than 30 people now with a regional office in Darwin. The company is located in excellent offices at 12 Greenhill Road, in the inner Adelaide suburb of Wayville.
AEC provides a hands-on approach to managing environmental risks, and has an uncompromising commitment to the highest standards of professionalism in all facets of the services it provides.
Its audit, engineering, environmental, manufacturing and property skills base have enabled AEC to provide a unique combination of services throughout South Australia and its expanding services in the Northern Territory with work also coming from Victoria and Western Australia.
Mr John Todd, MD of AEC noted that"AEC prides itself as a one-stop professional consultancy that co-ordinates the total process - from assessing a site through to determining a remediation or management strategy and then project managing it.
We are a solid growth-orientated company and we are well known here and respected for our no nonsense problem solving ability.
We had been considering our best growth pathway for the business and how we can better involve our staff in ownership over the long term in what we do and associated outcomes. Also we have many clients who would like us to help them with allied services. Having seen the way the Greencap business model works we were impressed and we are delighted to join forces with Greencap to further grow our business.
Our ability to continue to operate as AEC and be masters of our destiny but within an expanded services group is the best of both worlds for us," concluded Mr Todd.
As the latest addition to the Greencap Group, AEC sees expanding business opportunities by utilising the synergies of the existing Group members. The company sees itself as a key member of the Greencap group, and believes its expertise will add significantly to the Group's existing talents.
Noel Arnold & Associates, for example, has a very strong occupational, health and safety consulting division and this is likely to provide opportunities on which AEC can apply leverage.
Similarly, ENV through its environmental management consulting, complements the services offered by AEC, making the combined talent of both companies a formidable marketable commodity particularly where Adelaide based staff can underpin the push into WA that has severe staff shortages. Also Greencap group companies, ECC with its energy and water management services plus ELP with its Northern Australian environmental foothold will bolster the combined group efforts.
