The sell-down of private businesses in Western Australia has continued with the Eldridge family exiting its leading analytical laboratory group, Ultra Trace Pty Ltd, in a move that further rationalises the industry.
The sell-down of private businesses in Western Australia has continued with the Eldridge family exiting its leading analytical laboratory group, Ultra Trace Pty Ltd, in a move that further rationalises the industry.
Victorian rival Amdel Ltd made Canning Vale-based Ultra Trace its second local acquisition in recent months, following the purchase of Welshpool-based Independent Metallurgical Laboratories Pty Ltd, a 22-year-old business, in April.
The latest transaction leaves Kalgoorlie-based Kalassay Group as the biggest remaining independent player in WA.
Neither Amdel nor Ultra Trace would disclose the price agreed, but speculation put the figure at more than $80 million following the sale of its smaller Maddington-based rival, Genalysis Laboratory Services Pty Ltd, in May for $56 million.
Accounts lodged with the Australian Securities Investment Commission showed that Genalysis was the more profitable of the two companies in the year ending June 2006. But Ultra Trace is significantly bigger, with 370 staff compared with about 270 at Genalysis at the time of the sale.
The price is also likely to have been pushed higher by the involvement of private equity, with Amdel receiving the financial backing of CHAMP Ventures. Private equity is prepared to pay multiples of seven to nine times forecast earnings before interest, tax, depreciation and amortisation.
Furthermore, Ultra Trace’s dominant position in the buoyant iron ore sector was also seen as a strong selling point.
The firm says its facility is the world’s biggest operation with instrumentation for XRF testing, the preferred method for the iron ore industry.
Ultra Trace was established in 1994, making it a much younger business than Genalysis, which was founded in 1975.
Ultra Trace founder Colin Eldridge, who runs the company with his son, Victor, said the business had grown too big for the existing management to continue expanding – a point of view which echoes the sentiments behind several recent family business sell-downs.
“It was certainly getting to a size of business that myself, as a chemist and not a large commercial business manager, felt we were at the limit of our business capabilities,” Mr Eldridge said.
He said he and his son would remain as consultants to the business for the next 12 months under the deal which was a cash transaction that did not include a work-out clause.
Ultra Trace was advised on the transaction by Ernst & Young.
Mr Eldridge said the past 14 years had been a period of strong growth but the growth in the iron ore sector underpinned the operation’s future.
Amdel group general manager business development David Clinton said the purchase of Ultra Trace and IML in WA gave the company a strong position in the state, complementing its 22-laboratory network around Australia and New Zealand.
Mr Clinton said the Perth operations almost rivalled its biggest operations, in Adelaide, in terms of size.
“This gives us a one-stop shop,” he said.
Asked if the acquisition positioned Amdel for a public listing, Mr Clinton said that was a possibility.
He also suggested that the company could now look further afield for acquisitions and was actively assessing offshore markets for opportunities.
