- SRJ Technologies (SRJ) delays its buyout of pipeline integrity specialist STATS (UK) amid concerns around changing market conditions over the start of 2022
- The company initially planned to complete the £73.1 million (A$139 million) buyout in late February, but the company now targets April for the transaction completion
- SRJ says with changes in market conditions in Australia and globally in 2022 so far, it is prudent to ensure a $142-million capital raise associated with the deal is successful
- This also means a suspension of SRJ shares, which was meant to lift in early March, is likely to continue for longer than anticipated
- Shares in SRJ Technologies last traded for 43 cents each on Thursday, November 18, 2021.
SRJ Technologies (SRJ) has delayed its buyout of pipeline integrity specialist STATS (UK) amid concerns around changing market conditions over the start of 2022.
SRJ was planning to raise $142 million through the issue of 284 million CHESS Depositary Interests (CDIs) at 50 cents each to fund the STATS buyout.
However, the company today said in an announcement to the ASX it was delaying the cap raise — and, subsequently, the acquisition — thanks to “significant changes to underlying market conditions in Australia and globally since the start of 2022”.
SRJ CEO Alexander Wood said it was prudent for the company to be mindful of market conditions to ensure its capital raise was successful.
“With current volatility in financial markets, we have agreed with our advisors to delay the capital raise until there are signs of stability in underlying market conditions,” Mr Wood said.
“The company will release a revised timetable for the capital raising to the market when this has been settled with the lead manager.”
SRJ has given late April as a broad-strokes timeframe for when it expects to complete the STATS acquisition — roughly two months later than the original date of February 28.
Why the buy?
Through the STATS buy, SRJ said it would accelerate its priorities in the assets integrity market given STATS’ provision of pipeline integrity solutions and maintenance for the global energy industry.
SRJ said the acquisition was designed to supplement its business with a portfolio of disruptive technologies well-positioned to capitalise on growth in the global energy market and the transition to green energy.
STATS generated $78.9 million in revenue and $11.3 million in earnings before interest, tax, depreciation, and amortisation (EBITDA) over the 2020 financial year.
All up, SRJ plans to fork out £73.1 million (A$139 million) in a mix of cash and scrip for full control of STATS. Specifically, SRJ will pay £67.2 million (A$128 million) in cash and issue STATS 21.5 million shares at 50 cents each as part of the acquisition.
This would give STATS an effective 5 per cent shareholding in SRJ once the purchase is complete.
SRJ suspended its shares from trade on the ASX following news of the acquisition given the purchase could result in a material change to SRJ’s activities — meaning it would no longer comply with some key ASX listing rules.
SRJ was originally planning to complete a re-quotation on the ASX on March 7. However, given the delay in the acquisition, SRJ shares may now be locked up for some time longer.
Shares in SRJ Technologies last traded for 43 cents each on Thursday, November 18, 2021.