- Mining and infrastructure solutions company Orica (ORI) is raising up to $725 million through a placement and share purchase plan (SPP)
- The $650 placement is funding the acquisition of Axis Mining Technology who’s set to deliver “compelling” opportunities once integrated with Orica
- The acquisition comprises an upfront $260 million cash payment and a deferred earn-out payment of up to $90 million, subject to conditions
- The ASX 200 company will issue 40.6 million shares to institutional investors under the placement at $16 per share and the SPP to follow will be capped at $75 million
- Shares last traded at $17.20 on August 2 and are expected to resume trade on August 4
Orica (ORI) has announced it will raise $650 million to fund the acquisition of Axis Mining Technology.
The mining and infrastructure solutions provider entered a trading halt today before soon announcing the acquisition and associated capital raise.
The buy
Axis Mining Technology designs, develops and manufactures specialised geospatial equipment for the mining industry.
Its geospatial technology reportedly accelerates Orica’s ability to support new mineral discoveries required for decarbonisation. Axis’ gold and copper exposure also accelerates
Orica’s broader commodity mix objectives.
Essentially, Orica believes the acquisition will deliver “compelling” growth opportunities and position it to become the mining industry’s first integrated, end-to-end, mine-to-mill solutions provider.
Orica Managing Director and CEO Sanjeev Gandhi said he’s pleased to welcome Axis into
Orica.
“The integration of Axis’ technology and expertise will accelerate our ability to support our customer’s digital transformation efforts around the world, helping them to operate more efficiently, sustainably and safely,” he said.
The ASX 200 company agreed to acquire Axis for an upfront cash consideration of $260 million and a deferred earn-out payment of up to a maximum of $90 million, subject to financial performance and other conditions being met.
The company expects the acquisition will be finalised by October.
Capital raise
Orica will fund the upfront consideration and earn-out payments through a $650 million institutional share placement.
Under the placement, the company will issue 40.6 million new shares to institutional investors at $16 per share. The issue price marks a seven per cent discount to the last traded price of $17.20 on August 2.
The placement shares are expected to settle on August 8 and will commence trading on the following day.
Subsequently, Orica will offer eligible shareholders the opportunity to participate in a non-underwritten share purchase plan (SPP) to raise up to an additional $75 million.
The SPP will be priced at the lower of the placement price and a two per cent discount to the five-day volume-weighted average price of ORI shares.
The SPP will be open from August 10 until August 26 with the new shares to be issued on September 2.
Orica noted the acquisition and placement are expected to be earnings-per-share accretive from the first full year of ownership, and the return on net assets contribution from the acquisition is expected to be in line with Orica’s guidance of 10 to 12 per cent.
The company is expected to come out of the trading halt on August 4.
Shares last traded at $17.20 on August 2.