- Macmahon will purchase GBF Mining Group for $48 million upfront and two potential earn-out payments
- GBF founders and its management team will remain in the business
- The purchase will allow the companies to use its complementary strengths to create a strong platform for upcoming underground mining opportunities
- Macmahon says the purchase will provide an immediate boost to its underground mining scale and capability
- The purchase is expected to be completed in mid-August this year
Macmahon Holdings has purchased contractor GBF Mining Group for $48 million and two earn-out payments.
The $48 million purchase represents a small premium to GBA’s net tangible asset (NTA) value. Thus implies an enterprise value and earnings before EBITDA.
The two earn-out payments are subject to GBF achieving specific performance goals over the next two financial years, and can be paid up to 20 per cent in Macmahon shares.
Under the terms of the agreement, GBF founders and management team will remain in the business. The purchase is expected to be completed in mid-August this year.
Macmahon CEO Michael Finnegan said the purchase will allow both companies to use their complementary strengths to create a strong platform for upcoming underground mining opportunities.
“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,” Michael said.
He added that while there are potential synergies to be realised with the purchase, growth is the key driver of the transaction.
“GBF’s brand and key personnel will be retained, with its capabilities and strong client relationships being fully integrated into Macmahon’s underground business, to maximise our ability to win new work,” he said.
GBF founder Michael Foulds shared similar sentiments, saying the company is believes the combination of the businesses will bring about new growth opportunities.
“We are excited to join the Macmahon team and are confident this acquisition will create a strong group that will benefit our current clients and unlock new contract opportunities,” he said.
Benefits of the purchase outlined by Macmahon include a boost to its underground mining scale and capability, an increased ability to provide both surface and underground services at the outset, and experienced management with strong client relationships and a pipeline of existing contacts and tender opportunities.
Macmahon is experienced in both surface and underground mining and offers mining services to miners throughout Australia and South East Asia. GBF’s core focus is underground mining and industrial services, and the company has a strong presence in the Western Australian Goldfields.
Macmahon shares are down slightly today, trading at 19 cents per share compared to a previous close of 20 cents. Macmahon shares trade in a $403.41 million market cap.