Macmahon Holdings Limited (ASX: MAH) has announced it’s making an acquisition.
Macmahon was founded in 1963 and provides mining services to miners in Australia and South East Asia. It operates with both surface and underground mining with resources projects across a range of locations and commodity sectors.
Macmahon is acquiring specialist underground contractor GBF Group which the company said it immediately adds underground scale and capability and expected to add to profit / earnings per share (EPS).
The purchase price comprises $48 million upfront, to be paid in cash, with two possible earn-out payments over time which relate to performance over the next two years. The purchase price implies a valuation of FY20 Enterprise value / EBITDA ratio of 2.4x (click here to learn what EBITDA means).
Macmahon CEO Michael Finnegan said: “GBF is a strategically compelling and financially attractive acquisition for Macmahon. With GBF we have the opportunity to achieve meaningful scale in our underground contracting business, which is a key pillar in our strategy of becoming a leading mining contractor that can service clients through the life cycle of their mining operations.
“There are also potential synergies to be realised as the two businesses are combined, but growth is the key driver of the transaction.”
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.