Swedish company Sandvik Mining has announced a $106 million takeover offer for equipment manufacturer SDS Corporation Ltd.
Swedish company Sandvik Mining has announced a $106 million takeover offer for equipment manufacturer SDS Corporation Ltd.
Sandvik Mining and Construction Australia Pty Ltd, a subsidiary of the Swedish company, is offering $1.14 in cash for each SDS share, compared to yesterday's closing price of $1.00 and representing a 31.1 per cent premium to the volume weighted average price of SDS shares for the three months up to the close of trading on 6 April.
At 1119 WST, shares in SDS had risen 11.5 cents to $1.115.
SDS, whose major operations are run from Canning Vale, dominates the supply of drill bits for the Australian minerals industry. The company employs more than 500 people working in 21 branches across Australia, Canada, Africa and Indonesia.
Sandvik Mining and Construction is a business area within the Sandvik Group and a world leading manufacturer of drilling and excavation machinery, tools and service for the mining and construction industries.
SDS believes Sandvik's operations complement SDS's strength in exploration and mine infrastructure and by combining the two businesses, SDS would be in a better position to grow in Australia and globally.
The board of SDS has unanimously recommended that its shareholders accept the offer, in the absence of a superior proposal.
SDS Managing Director, Fred Moir, who is also the company's largest shareholder with a relevant interest of 43.03 per cent, has agreed to sell a 10 per cent stake in SDS to Sandvik in a pre-bid agreement and indicated his intention to accept the offer for the balance of his relevant interest, in the absence of a superior proposal.
SDS reported invoiced sales of $113 million in 2005 and $69 million for the first half of the 2006 financial year.
Sandvik Mining and Construction president Lars Josefsson said "This acquisition is in line with the Sandvik Group's long-term strategy of continuing profitable growth.
"SDS is a strong company with a good market position, and by acquiring it we intend to grow the business in Australia and globally. SDS' strengths in exploration complement Sandvik's existing mining offering.
"The acquisition extends Sandvik's core offering into the exploration market and gives us a more comprehensive product range for our customers. The acquisition gives the SDS business more opportunity to grow by providing access to the resources of a world leading mining equipment group," Mr Josefsson said.
Sandvik expects its offer to open on 13 April 2006 after which it will be open for 1 month (unless extended) until 5.00pm WST on 15 May 2006.
The offer is subject to a number of conditions, including Sandvik receiving necessary regulatory approvals and acquiring at least 90 per cent of the total number of SDS shares on issue.
