Macmahon Holdings is set to expand its civil business through the acquisition of Decmil, a construction company operating across Melbourne, Brisbane and Perth.
The mining services provider has entered into a scheme implementation deed where it will acquire 100 per cent of Decmil’s share capital.
Under the transaction, Decmil shareholders will receive a cash consideration of $0.30 per share for every ordinary share and $0.343 per share for every redeemable convertible preference share (RCPS) held.
The $127 million deal is expected to add about $6 billion to Macmahon’s existing civil pipeline of $4 billion, as well as an order book of around $450 million.
The acquisition will also allow Macmahon to broaden its east coast presence in Victoria and Queensland, with an opportunity to expand into New South Wales and South Australia.
“The acquisition of Decmil is a significant milestone in Macmahon delivering on its long stated strategy to diversify its earnings and deliver a more resilient, scalable business enabling greater returns to shareholders,” Macmahon managing director and chief executive officer (CEO) Michael Finnegan said.
“Decmil provides an established, well credentialed platform to allow Macmahon to better pursue the large opportunity pipeline of resource civil infrastructure and rehabilitation opportunities while diversifying earnings towards renewables and infrastructure, which are both expected to have an increased level of spending in the next decade.
“I look forward to the transaction successfully completing and welcoming Decmil into the Macmahon team.”
Upon completion, Macmahon will integrate its civil business into Decmil and will run the company as a wholly owned subsidiary under the same name. Decmil CEO Rod Heale will continue leading the business.
The Decmil board has unanimously recommended that Decmil shareholders vote in favour of the acquisition, in the absence of a superior proposal. Decmil chairman Andrew Barclay said the transaction represented “attractive value” for Decmil shareholders.
“While the Decmil turnaround is starting to gather pace, Macmahon’s all-cash offer at a strong premium to Decmil’s current share and redeemable convertible preference share prices provides our security-holders with both certainty and accelerated value today that Decmil’s position as a standalone company cannot be guaranteed to provide,” Decmil chairman Andrew Barclay said.
“While I have absolute confidence in Decmil’s future operational and financial performance as a mid-size player in the civil engineering sector, without the assistance of an extensive balance sheet offered by companies such as Macmahon, achieving full recognition for that performance is not without challenge.
“Based on those considerations, the offer from Macmahon therefore provides a compelling outcome for securityholders, to realise immediate value for their Decmil shares and Decmil RCPS.”
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