24/11/2020 - 10:00

Primero to accept $100m NRW offer

24/11/2020 - 10:00

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NRW Holdings is seeking its fifth acquisition after announcing a $100 million off-market takeover of fellow Perth-based contractor Primero Group.

Primero to accept $100m NRW offer
Jules Pemberton says the likely Primero acquisition will further diversify NRW's services. Photo: Gabriel Oliveira

NRW Holdings is seeking its fifth acquisition after announcing a $100 million off-market takeover of fellow Perth-based contractor Primero Group.

NRW announced the deal this morning, saying it aligned with the company's strategic growth plan.

It has offered Primero shareholders 27.5 cents in cash per share held in the company, along with with 0.106 NRW shares.

The deal values Primero at 55 cents per company share. Its directors have unanimously recommended shareholders accept the offer.

Primero managing director Cameron Henry will remain with the business under NRW ownership.

It would mark the fifth acquisition for NRW, which purchased BGC Australia’s contracting subsidiary for $116 million in cash in late 2019, subsequently renaming the business to NRW Contracting, and RCR Tomlinson’s mining technologies business for $10 million nine months earlier.

NRW also owns civil and mining contractor Golding Group, which it purchased for $85 million in 2017, and Hughes Drilling and Comiskey Earthmoving.

NRW now has four services divisions: Civil, Mining, Drill and Blast, and Minerals, Energy and Technologies.

Its civil business generated $811 million in revenue in the past financial year, while its mining business generated almost $970 million, drill and blast $173 million, and minerals $187 million.

Managing director Jules Pemberton said the likely Primero acquisition would further diversify the company's services.

"The acquisition of Primero will provide NRW with the opportunity to expand its Minerals, Energy & Technologies specialised capability and to leverage the combined expertise of both companies to pursue new business initiatives across a large pipeline of opportunities," Mr Pemberton said.

"In addition, Primero is also well-positioned to future focused energy solutions, including lithium and hydrogen technologies."

He said NRW and Primero had worked together on a number of projects.

Primero managing director, Mr Henry, said the deal was an attractive offer for shareholders.

"Importantly, the NRW offer allows Primero to avoid the need for a potential significantly dilutive capital raising to fund working capital required to deliver on our FY21/22 contracted order book, including the continued non-payment by Wärtsilä on the residual Barker Inlet Power Station contract monies," Mr Henry said.

Primero has an unresolved legal dispute with Wärtsilä Australia for work on the Barker Inlet Power Station, completed in late 2019.

Its order book stands at about $285 million for the current financial year, while its preferred contractor status for multiple projects totals about $900 million.

NRW was advised by law firm Corrs Chambers Westgarth while Primero was advised by Thomson Geer.

Primero shares were up 10.4 per cent at 1:08pm AEDT, while NRW was trading 5 per cent higher to $2.72.

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