Perth-based Resource Development Group has completed its acquisition of Central Systems today, as the new group looks towards growth and diversification.
It follows the announcement of the transaction in early August, when RDG’s share price soared over 275 per cent in one day.
Centrals, which employed around 700 people, was a construction company that had completed major resource project work in the Pilbara, whilst RDG focussed on design and consulting.
Bringing the two together would enable the provision of both services through one company, managing director Jeff Brill said.
“We were looking for something transformational to take RDG forward,” Mr Brill said.
“Because we had a firm view that the market was going to continue requiring design and construct contract execution, then the bringing together of the consulting, which includes environmental and engineering, together with construction, would give us the ability to target that particular niche.
He said the businesses were very complimentary with a number of common clients, and this would be a plus in a changing marketplace.
“The cycle we’ve experienced here in WA has been his long period of construction, and now we’re entering into a long period of production.
This would mean that the new business would include a stronger focus on production support work, in addition to greenfields construction work, and beef up its interest in utilities and defence.
“In a normalised market they’re very important,” Mr Brill said.
There has been recent media speculation that the new group will buy recently collapsed Killarnee Civil & Concrete Contractors, with potential for work in Chevron’s Gorgon project, whilst on the east coast, an increase in tender activity as coal seam gas and other sectors grow operations could provide opportunities.
Former Centrals directors will own around 78 per cent of the new entity after the deal.
“In the context of the current business environment this is an extremely positive story, Mr Brill said.
“We’re looking at creating a group that has got a fairly easily differentiable skill set, design and construct.
“We’re bringing together two complimentary organisations, and we’ve done it on a scrip basis and a subordinated shareholder loan basis.
“So we’ve done it in a way which is conducive to the current economic environment, it’s applicable to the flavour that the investment community has on service providers to the mining industry at the moment.
“So for our shareholders, for our employees and the company, it’s a very good transaction given the current state of the market.
RDG was up 4.76 per cent today to 11 cents per share.