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Valmec poised to acquire complementary oil and gas services business

The acquisition of APTS is expected to expand client base and boost earnings in fiscal 2018.
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Acquisition of APTS increases prospect of attracting multinational oil and gas groups

Valmec Ltd (ASX:VMX) a provider of services and equipment to the heavy industrial sector has entered into an agreement to acquire APTS Pty Ltd which has similar industry exposure.

The agreement is being negotiated with the receivers & managers of APTS Pty Ltd.

Should the acquisition be ratified Valmec will acquire the group’s plant and equipment, work in hand, inventory, intellectual property, licenses and accreditations.

The acquisition is to be funded from working capital and additional debt facilities and would not warrant and earnings per share dilutive capital raising.

APTS offers established client base and recurring revenues

APTS is a provider of non-destructive testing services and hydrostatic and pneumatic pressure testing to the Australian oil, gas, power and water industries.

The company has generated average annual revenues of $20 million over the past four years.

There are currently long term service contracts in place to the value of $5 million with oil and gas clients, with a tender pipeline relating to established clients of $13 million.

APTS’s client base includes multinationals such as Chevron, Woodside Petroleum, Shell and Origin Energy.

Acquisition expected to be earnings per share accretive in fiscal 2018

Valmec expects the APTS business to deliver underlying earnings returns of circa 10% should the anticipated synergies that exist between the two businesses be realised.

In terms of confidentiality provisions in the BSA, Valmec is unable to disclose the proposed purchase price, but confirmed that the acquisition would be cash funded.

The acquisition is expected to be completed in expected to be earnings per share accretive in fiscal 2018.

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December 17 2014

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