Walter buys WA's MacCormick for $35m

Perth's MacCormick family has agreed to sell its engineering and tunnelling business, DJ&MB MacCormick Civil Engineering, to ASX-listed contractor Walter Diversified Services Ltd of Sydney for $35 million.
The 31-year-old MacCormick business is based in Maddington and also operates in New South Wales and Queensland. On the international scene, MacCormick has operated successfully in Kuwait with potential markets elsewhere in the Middle East and India.
The deal comprises $30 million in cash and the issue of $5 million worth of Walter shares.
Also announced today, UK-headquartered oil services company Cape plc has bought Kwinana-based mining and industrial processing services company TCC Group in a cash and scrip deal worth at least $85 million.
Other recent deals include:Sydney-based Crane Group Ltd bought Welshpool's Kingston Bridge Engineering Pty Ltd for $100 million
English company Intertek Group plcpaid $56 million for Maddington-based minerals testing business Genalysis Laboratory Services Pty Ltd.
Belmont-based Paladio Group Ltd paid $54 million for Pilbara construction firm Decmil Australia Pty Ltd
Northbridge-headquartered VDM Group Ltd acquired Welshpool earthmoving contractor Malavoca for $45 million, the biggest of $98 million in purchases which included Wylie & Skene, Como Engineers and Barlow Gregg.
ASX-listed Coote Industrial Ltd, another Maddington company, paid $25 million for Kewdale rail company South Spur Rail Services, before also buying North Fremantle-based FCD Container Logistics for $12.5 million. Coote aslo bought GEMCO Rail for $33.8 million.
West Perth-based engineering services company Neptune Marine Services Ltd bought Midland company Tri-Surv Pty Ltd, paying $16.4 million in cash and scrip for the specialist hydrographic surveyor. It also bought Subsea Developments Australia for at least $5.5 million, plus earn-out.
Late last year, NSW-based steel player Bradken acquired Wundowie Foundry Pty Ltd in Western Australia for $8 million.

A Walter announcement is pasted below:

Walter Diversified Services Limited today announced the acquisition of the business and assets of Australia's leading micro-tunnelling and pipe-jacking contractor, DJ&MB MacCormick Civil Engineering, for $35 million plus transaction costs.

The acquisition is subject to various conditions, including certain key employees executing new service agreements with WDS and consents being obtained to the assignment of certain key contracts of the business.

The acquisition, effective 1 September, means that WDS will expand both its service offering to the pipeline industry and the geographies it covers.

MacCormick is based in Western Australia and also operates in New South Wales and Queensland. On the international scene, MacCormick has operated successfully in Kuwait with potential markets elsewhere in the Middle East and India.
The new company to be formed to acquire the business will be named MacCormick Civil and Tunnelling.

The consideration comprises $30 million in cash and the issue of $5 million worth of WDS shares, comprising 1,876,314 shares issued at $2.6648 per share based on a 45 day VWAP for WDS shares. The cash component will be funded by debt facilities already in place and will be earnings accretive from day one.

Micro-tunnelling is a non-disruptive construction methodology which minimises social and community impact of works and is environmentally sensitive. The trenchless technique will give WDS the capability to construct pipes with diameters between 150mm and 2,000mm in a manner that WDS doesn't currently offer.

"We believe there is a powerful growth rationale for us to offer this capability, as it will mean that, in conjunction with our pipeline arm DCC, we can offer a full service across the pipeline industry of conventional construction, trenchless construction as well as pipe jacking services," WDS Managing Director Garry Ash said.

"This is a very significant acquisition for WDS and one that will greatly complement our existing business. Micro-tunnelling is a perfect complement to the conventional trenching and infrastructure operations we offer. MacCormick also complements our existing civil operations and our presence in the WA, NSW and Queensland markets.

"Its proven success in Kuwait in recent years and reputation in the Middle East are very exciting for us, given our overseas expansion plans."

The MacCormick business has been in operation since 1976 and is owned by the MacCormick family. It currently has 114 employees. The business had normalised revenues of $35.6 million and EBIT of $6.5 million for FY2007. The acquisition is expected to be revenue and EPS accretive in FY2008.