RCR buys Water Corp business

RCR Tomlinson has negotiated a $10.4 million purchase deal for Water Corporation’s engineering and construction services business that includes $130 million in guaranteed work over the next three years.

RCR is buying Engineering and Construction Services, which provides design, civil construction, mechanical and electrical, fabrication and installation services for Water Corp with a team of 152 permanent employees.

Under the terms of the acquisition, RCR will deliver the design and construction of upgrades to the Subiaco wastewater treatment plant, upgrade a pump station and build a new tank at Cable Beach in Broome, and upgrade a pump station and construct a new tank and associated pipeline at Beverley.

The new work will boost RCR’s order book to just over $1 billion for 2015, a 31 per cent increase on the previous year, with the company to be the preferred proponent for extra work for Water Corp under an initial two-year term.

“The ECS business has abundant intellectual property, design, procurement and construction expertise in water and waste water treatment solutions, which we will grow and leverage into projects for other water authorities nationally and internationally,” RCR managing director Paul Dalgleish said.

“Importantly, the acquisition will expand our existing capability in the water sector, add to our already strong order book, and further diversify our revenues into infrastructure.”

Water Corp chief executive Sue Murphy said a reduced requirement to build significant new water and wastewater infrastructure had been the key driver for the sale of Engineering and Construction Services.

“We are coming out of a decade that has seen major changes in the management of Perth’s water supplies, such as the successful implementation of desalination,” Mrs Murphy said.

“This combined with lower population growth and the successful reduction in per-person water use means the need to deliver major water projects has lessened.

“Selling ECS provides the best opportunity for ongoing employment for our people – employees were given the opportunity to move across to the successful bidder, without loss of pay and conditions.”

Water Corp announced it was planning to sell its engineering arm in January.

The acquisition will be completed by the end of the month.

Water Corp was advised by UBS on the transaction.

Shares in RCR were 1.4 per cent lower to $1.65 each at 1pm.