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Western Australian mining and construction giant NRW Holdings (ASX: NW) is poised to acquire the late Len Buckeridge's BGC Contracting for $116.4 million.
As part of the transaction, NRW will take on $193.6 million of debt, thus implying an enterprise value closer to $310 million for the total transaction.
NRW will undertake a fully underwritten placement to raise $120 million to fund the acquisition, along with a separate $10 million share purchase plan.
NRW says the acquisition is of BGC is a strategic fit for the company, adding significant scale through an expanded service offering to a high-profile client base.
Additionally, the merger will enhance NRW's Mining Technologies business through the addition of DIAB Engineering, which provides specialist maintenance, industrial engineering and fabrication services.
Ultimately though, the acquisition will boost NRW's revenue and earnings base with a contract order book of around $1.5 billion, including around $0.7 billion currently scheduled for delivery in FY20.
"We are extremely pleased to announce the acquisition of BGC Contracting," says NRW CEO and managing director Jules Pemberton.
"BGC Contracting has a well-recognised and proud history built around the strong foundations set by the late Len Buckeridge."
"With an excellent track record supported by a diversified earnings base, extensive fleet and a long history with several high-profile clients, the acquisition is strategically and financially compelling and aligns with NRW's objective to deliver growth across the business and drive NRW shareholder value."
"We are enthusiastic about the opportunities ahead for the expanded NRW group, to leverage the additional capabilities and regional strengths of the combined group and further capitalise on our strong market reputation."
Based on pro forma FY19 figures the 'New NRW' business would have generated revenue of $2 billion and EBITDA of $199 million.
The combined group order book as at 31 August 2019 was $4 billion, with around $2.2 billion scheduled for delivery in FY20.
The sale of BGC, founded by Len Buckeridge over 50 years ago, follows a legal dispute over his fortune among 15 family members following his death in 2014.
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