Kingston Bridge founders net $100m

The low-profile founders of Welshpool manufacturing company, Kingston Bridge Engineering Pty Ltd, have cashed in on the surging economy by selling their business for $100 million.

Sydney-based Crane Group Ltd announced this week it would acquire Kingston Bridge from its two owners, Joe Horvat and Belmiro DaSilva George.

The Kingston Bridge deal continues a run of private business sales in Western Australia, which in most cases have allowed the vendors to generate much higher returns than would have been possible two or three years ago.

English company Intertek Group plc, for instance, recently agreed to pay $56 million for Maddington-based minerals testing business Genalysis Laboratory Services Pty Ltd.

Other deals this year included Paladio Group Ltd paying $54 million for Pilbara construction firm Decmil Australia Pty Ltd, VDM Group Ltd paying $45 million for earthmoving contractor Malavoca and Coote Industrial Ltd paying $25 million for rail company South Spur Rail Services.

Mr Horvat said he was not looking to sell the pipe manufacturing business but had been approached by other parties.

“It was a hard decision,” he said. “It’s a happy and sad feeling, we had grown close to the staff.”

Kingston Bridge employs 75 people and was expected to generate revenue of $65 million in the year to June 2007.

The acquisition price represented a multiple of 7.5 times the company’s earnings before interest of tax.

The EBIT multiple was higher than for many other private business sales, which are usually four to five times earnings.

An unusual feature of the Kingston Bridge deal is that payment is entirely in cash and the vendors will shortly leave the business.

Most other business sales involve a mix of cash and shares, which are designed to lock-in the vendors.