Macmahon Holdings Ltd has acquired a specialised underground mining services business operating as Australian Raise Drilling and Combined Resource Engineering for $27 million.
ARD and CRE will become part of Macmahon on 1 September 2006, with the transaction to be funded from existing bank facilities and cash reserves.
ARD provides vertical and horizontal raise drilling of large diameter shafts for mine ventilation, access and mine development. CRE provides engineering design, manufacture and installation of underground mine infrastructure. The acquisition will be earnings per share accretive in the 2007 financial year and has a projected FY07 EBITA multiple of 4 times.
Macmahon, which is purchasing the assets and contracts of ARD and CRE, expects that the annual revenue for the 2007 financial year will be approximately $55 million.
Macmahon chief executive Nick Bowen said the acquisition fit perfectly with the company's strategy to expand its core capability within its key businesses.
"ARD and CRE are market leaders, delivering a specialised service that owner miners do not generally undertake," he said.
"This strategic acquisition will allow Macmahon to step up to another level by increasing the range of specialist services available to its mining customers.
"Other benefits are that these operations have low ongoing capital requirements and generate margins above our mining business average.
"We will now work to ensure we take full advantage of the excellent opportunity to grow the business and increase returns," Mr Bowen said.
The ARD and CRE management team and employees will remain with the business and are committed to realising the benefits that will flow from access to the Macmahon Group's balance sheet, systems and diverse customer base.
Employing an experienced workforce of 180 people ARD and CRE have offices in Adelaide, Perth and Mt Isa, as well as a large fabrication workshop in Adelaide.
