Northbridge-based VDM Group Ltd is back on the acquisitions trail, announcing plans to acquire three Western Australia-based businesses for $87.5 million in cash and scrip during the 2007-08 financial year.
Northbridge-based VDM Group Ltd is back on the acquisitions trail, announcing plans to acquire three Western Australia-based businesses for $87.5 million in cash and scrip during the 2007-08 financial year.
VDM will pay $20 million in cash and $25 million in scrip for Welshpool-based earthmoving and civil contracting business Malavoca Pty Ltd, paying $15 million in cash at settlement and $5 million six months afterwards, and issuing 10 million shares at $2.50 each.
VDM also said in an announcement Malavoca employees would be offered employment with VDM on similar terms, with key executives entering executive employment contracts with the company.
East Perth-based building and construction company Wylie & Skene will also be acquired for $14 million in cash, to be paid by June 30 2007, and $16 million in scrip - to be funded by the issue of 6.4 million VDM shares at $2.50 each.
VDM said the offer was based on a projected earnings before interest and tax in 2007-08 of $7.5 million, with the purchase consideration to be reduced by $4 for every $1 shortfall in the projected EBIT should it not be achieved.
The acquisition of Mosman Park-based Como Engineers Pty Ltd will cost VDM $6.6 million in cash and $5.9 million in scrip, funded through the issue of $2.4 million shares at $2.50 each.
The total cost of the three companies will reach $87.5 million, comprising $46.9 million in shares and $40.6 million in cash. VDM has funded the cash component of the acquisitions through a placement of 24 million shares at $2.25 each.
The full text of an overarching company announcement is pasted below
VDM Group Limited (ASX: VMG) today announced three separate acquisitions which will generate significant revenue and earnings growth for the 2008 financial year.
VDM Group has reached agreement to acquire the following Western Australian-based businesses:
- Wylie & Skene Pty Ltd a building and construction company
- Como Engineers Pty Ltd an engineering consultancy to the mining and mineral processing industries
- Malavoca a civil construction and earthmoving business.
The terms of each proposed acquisition are summarised in separate ASX releases which have been released concurrently with this ASX release.
On an annualised basis, the three acquisitions are expected to generate revenue of at least $158 million and net profit before tax of $20 million after integration costs and group overheads.
The total purchase price that VDM Group has negotiated is $87.5 million of which $46.9 million is proposed to be paid in shares and $40.6 million paid in cash. To finance the cash component of the acquisitions, VDM Group has placed 24 million shares to institutional and sophisticated clients of Patersons Securities and Euroz Securities at a price of $2.25 each.
A meeting of VDM Group shareholders has been convened for 15 June 2007 to approve various share issues associated with the acquisitions and the capital raising.
Commenting on the acquisitions, VDM Group CEO, John Farrell, said: "All three businesses we plan to acquire are a wonderful business in their own right. However, when they are combined and added to our existing divisional structure, the expanded expertise provides VDM Group with significantly enhanced market positioning. It is also particularly satisfying to have gained the support of the
professional investment community to enable us to rollout our growth strategy for the 2008 financial year."
