The shares of Southern Cross Electrical Engineer Ltd (ASX:SXE) will enter the communications and telecommunications sectors after signing a binding agreement to acquire contractor Datatel Communications.
Datatel provides SCEE with a platform for the fast growth expected in the telecommunications sector where there is an estimated Australia-wide construction spend of about $25 billion over the next three years.
There is an existing client base in commercial, industrial, health and education sectors.
Initial consideration is $6.2 million, with up to a further $11 million payable to the vendors on achievement of EBITDA growth targets in FY17, FY18 and FY19.
The cash component of the initial consideration ($5.58 million) will be funded from SCEE’s existing cash reserves, which stood at $50.4 million as at 6 June 2016.
The acquisition is expected to be EPS accretive in FY2017.
SCEE will acquire the business which has a significant presence in Western Australia, including relationships with key lead contractors in the delivery of the National Broadband Network (NBN) project.
The acquisition is on track to be completed in mid-June 2016.
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