Investors welcome Austin acquisition

Austin Engineering has struck a deal to buy Queensland-based mining equipment manufacturer Mainetec, with an initial payment of $19.6 million.

Kewdale-based Austin will make three further earn-out payments if Mainetec achieves agreed performance hurdles over the next three years.

The market welcomed the news, with Austin’s shares jumping 12.7 per cent today to 31 cents, valuing the company at $160 million.

Mainetec's focus is on ‘dipper’ mining buckets, which Austin said would complement its recently-launched JEC bucket range.

Austin said the dual product offering would increase its market share in Australia, especially on the east coast where Mainetec has a well-established presence.

Austin also plans to offer Mainetec's buckets into its global markets, particularly North and South America.

Mainetec is expected to have revenue of more than $40 million (on an annualised basis) for the 2023 financial year.

The acquisition values Mainetec at 3.5 times its forecast FY23 EBITDA.

If expected synergies, worth $3 million, are included, the multiple falls to 2.3 times EBITDA.

The initial cash payment to the Mainetec vendors will be split in three, with $11.1 million to be paid on settlement and two further payments at the end of year 1 and year 2.

In addition, Austin will pay a further $6 million in scrip if the Mainetec business meets certain targets.

Austin managing director David Singleton said the key benefits of the acquisition were the ability to expand in Australia and offer more products into other markets around the world.

“Mainetec is a technology led business that has developed the Hulk range of buckets suited to demanding applications and has also become a key supplier in Australia for dipper buckets used on rope shovels,” he said.

“Dipper buckets are typically the largest used in the industry and we will be able to introduce these upgrades through our operations in the much larger Americas markets.

“Mainetec’s presence on the east coast of Australia will also support our re-energised activity in that region.”

Austin was advised by investment bank UBS and law firm Johnson Winter & Slattery.