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- Duratec (DUR) signs a share purchase agreement to wholly-acquire Wilson’s Pipe Fabrication (WPF) for a maximum sale price of $18 million
- The acquisition is a milestone in the company’s strategic plan to grow the business through complementary business acquisitions
- Duratec expects the acquisition to be complete around mid-October
- Initial consideration payments to WPF will be funded through the company’s existing cash reserves and any payment made under the earn-out consideration will be funded through existing cash reserves, equity or debt
- Shares in Duratec are up 2.35 per cent, trading at 43.5 cents as of 2:28 pm AEST
Duratec (DUR) has signed a share purchase agreement to wholly-acquire Wilson’s Pipe Fabrication (WPF) for a maximum sale price of $18 million.
The company will pay $9 million in its initial consideration and up to a further $9 million from a contingent payment, payable based on FY23 audited earnings before interest, taxes, depreciation and amortisation (EBITDA) achieved.
Based in Perth, WPF provides onshore and offshore mechanical engineering services to Tier 1 oil and gas producers, including drill rigs maintenance.
WPF revenue over the past four years has averaged $20.5 million annually, with an average operating profit of just under $3 million.
The acquisition is a milestone in the company’s strategic plan to grow the business through complementary business acquisitions.
Commenting on the acquisition, Managing Director Phil Harcourt said the company believes it can grow the business by introducing their services to WPF’s customers, expanding its services via Duratec’s geographical footprint.
“The acquisition provides Duratec exposure to a sector that is difficult to penetrate organically, and with significant capex spend recently by oil and gas companies, we foresee large spend in maintenance budgets into the medium to long term,” he said.
“With Duratec’s organic growth, the acquisition of Wilson’s Pipe Fabrication will add to the group’s EBITDA growth into the future.”
The company expects the completion of the acquisition to occur around mid-October.
Initial consideration payments to WPF will be funded through the company’s existing cash reserves and any payment made under the earn-out consideration will be funded through existing cash reserves, equity or debt.
Duratec’s modelling showed the acquisition is expected to be immediately EPS accretive, before synergies, transaction costs and integration cost, based on WPF’s forecast FY23 EBIT of $4.1 million.
Shares in Duratec were up 2.35 per cent, trading at 43.5 cents as of 2:28 pm AEST.
