Perth based drilling fluids supplier Imdex has announced a conditional agreement to acquire a South American counterpart, Brazil-based System Mud for $9 million in cash and shares.
System Mud is the leading independent supplier of drilling fluids and chemicals in Brazil.
Under the conditional agreement, Imdex will pay $4 million in cash at settlement; $3.84 million in Imdex shares at $2.40 per share; and $1.155 million in Imdex shares at $3.50 per share.
The proposal is expected to be effective from August 1, and Imdex said it would be funded from existing cash reserves and debt facilities.
Imdex said the 'bolt-on' acquisition was consistent with its core strategy of growing its global presence.
“System Mud is a natural fit for Imdex given the strong alignment of the company's products and markets,” managing director Bernie Ridgeway said.
“It's a strong busienss that will enhance further expansion of Imdex's drilling fluids and chemicals division.
“In addition, System Mud's Brazilian focus is complementary to Imdex's existing geographic footprint.
“The business will sit well within our existing Latin America regional operation that has been growing strongly given the substantial growth of the minerals industry in that region.”
At close of trade today Imdex's stock had gained 0.85 per cent, to finish at $2.38.
