RCR Tomlinson has bought the Stelform Engineering Group for $6.85 million, to be split $5.48 million in cash and the rest in RCR shares.
Stelform finshed 2003-04 with sales of $29 million and a before tax profit of $2.2 million, leading RCR to upgrade it s net after tax profit for 2004-05 to $4.5 million.
That represents earnings per share of 60 per cent.
Stelform, based in New South Wales, has assets of $2 million in cash, $4 million in plant and equipment and $0.85 million in stock and inventory.
It specialises in three types of engineering: pipe spooling; the design and fabrication of shell and tube heat exchangers and pressure vessels; and site installation and maintenance specialising in the refurbishment of high temperature plant and erection of pressure retaining equipment in the chemical, petrochemical, petroleum and sugar industries.
RCR managing director John Linden said the Stelform business had significant synergies with RCR’s operations in the areas of marketing and engineering design.
He said it would also increase RCR’s capacity to service various industry sectors.
Stelform will continue to operate under its existing management structure with all of its key shareholders and employees keeping their employment contracts under RCR’s ownership.
When the acquisition is completed, RCR has told the Australian Stock Exchange that it will be targeting $130 million in sales for 2004-05.
According to a Hartleys report, RCR’s current strategy allows it to make the most of the buoyant Australian economy.
It has put a buy recommendation on RCR stock.
"We believe the acquisition places the company in an excellent position to consolidate its stature as a growing and respected player within the engineering position and among its peers," the report sayd.