Mermaid Marine Australia has agreed to purchase the subsidiaries of Singapore-based marine services provider Jaya Holdings for $S625 million ($550 million), in an all-cash deal which represents one of the largest acquisitions by a Western Australian company in recent years.
Mermaid Marine Australia has agreed to purchase the subsidiaries of Singapore-based marine services provider Jaya Holdings for $S625 million ($550 million), in an all-cash deal which represents one of the largest acquisitions by a Western Australian company in recent years.
Mermaid will acquire Jaya's subsidiaries Offshore Support Services and Offshore Engineering Services, which effectively represent all of the Jaya business.
The acquisition is a major strategic move by Mermaid, which has been looking to diversify internationally to complement its Australian operations.
The purchase includes about $101 million in net cash held within Jaya's subsidiary companies, giving the business an enterprise value of $449 million.
The deal dwarfs Troy Resources' $188m takeover of Azimuth Resources, which was the biggest acquisition by a WA-based company in 2013.
Woodside Petroleum's planned $US850 million purchase of a 25 per cent stake in the Leviathan gas field is the only acquisition by a WA-based company in the past two years worth more than the Mermaid deal.
The Mermaid acqusition is expected to deliver mid-single digit earnings per share accretion in the 2014 financial year, excluding transaction expenses, the company said.
Mermaid will fund the purchase through a $317 million equity raising and new debt facilities from its existing financiers National Australia Bank and ANZ Banking Group, including a $US227 million acquisition facility.
The capital raising will comprise a seven for 18 fully underwritten entitlement offer at $2.40 per share to raise $217 million and an underwritten institutional placement to raise a further $100 million.
The deal requires approval from Jaya shareholders, however the company's five major stockholders - which together account for about 53 per cent of Jaya shares - have agreed to vote in favour of the transaction, subject to there being no superior offer.
Jaya generated revenue of $US117 million and earnings before interest, tax, depreciation and amortisation of $US55 million in the 2013 calendar year.
The SGX-listed company's assets include a fleet of 27 vessels, two ship yards in Singapore and Indonesia and a new build pipeline of a further six vessels, three of which will enter the fleet by early next year.
Jaya's fleet operates across South-East Asia, the Middle East, West Africa and East Africa.
Mermaid Marine managing director Jeff Weber said the acquisition would provide Mermaid with a significant growth platform.
"The acquisition represents an excellent opportunity to deliver on one of our key strategic objectives by delivering immediate scale in international markets," he said.
"(It) provides increased geographic diversification for our vessel operations through the addition of a complementary vessel fleet which already has operations in markets across South-East Asia and the Middle East.
"Ownership of two shipyards located in Asia will allow us to combine Mermaid's existing marine technical expertise with Offshore Engineering Services' technical shipbuilding capacity."
Mermaid will retain key Jaya management and employ external advisers to help devise an integration plan for the business.
The deal is expected to be completed before the end of April.
Morgan Stanley acted as financial adviser to Mermaid on the transaction and its debt and equity raisings.
Ashurst Australia acted as legal adviser to Mermaid on the acquisition and in relation to the capital raisings and new debt facilities, while Allen & Gledhill also acted as legal advisers to the acquisition.
Mermaid meanwhile announced a 25.5 per cent fall in half-year net profit to $24.2 million, with a number of key projects pushed back to the second half of the financial year.
The company flagged in November last year that its first-half earnings would be softer than first anticipated on the back of the delays.
Mermaid's revenue was up 14 per cent at $253.5 million but EBITDA was 10 per cent lower at $57.6 million.
The company is however tipping that it will enjoy a stronger second half, reaffirming that it expects its full-year profit to be in line with the $60.3 million it notched up last financial year.
Mermaid entered a trading halt this morning, having last traded at $2.81.
