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In its first major acquisition in more than a year of looking, Hellaby Holdings (NZX: HBY) has bought an 85% shareholding in international oil services group Contract Resources.
The deal, which requires a payment of about $73 million, values the company at $116 million including $30 million of debt. The remaining shares will be retained by three Contract Resources executives: chief executive Andrew Wells, Trevor Penny and Gray Gardner, each with 5%.
The vendors include Wellington investment company Rangatira, which had a 50% shareholdings.
Rangatira’s involvement with Contract Resources dates from 2004 and since that time the company has substantially expanded both its operations and returns, becoming one of Rangatira’s two largest investments, it says.
Recently some shareholders have expressed a wish to exit their shareholdings and, following a competitive sale process, chose Hellaby as the purchaser.
Rangatira CEO Ian Frame says, “While we have not been looking to sell, Contract Resources has grown to represent more than a third of our unlisted investment portfolio.
“With some of our initial partners selling and Hellaby’s offer for control at an attractive level, we have decided it is an appropriate time to realise the funds of just over $50 million for reinvestment into other growth opportunities.”
Hellaby managing director John Williamson says he is delighted with the deal, which took more than a year of intensive work by a team examining investment opportunities.
“As Hellaby reshapes its portfolio, a key strategic ambition is to acquire, fund and grow internationally successful New Zealand businesses,” he says.
The acquition will have an immediate positive impact on Hellaby's earnmings, Mr Williamson says, adding that Contract Resources is forecast to have revenues of around $150 million in the year to March, 2014, and pretax (ebitda basis) profit of more than $20 million.
In its latest year, to June 30, Hellaby's revenues were $498 million, generating ebitda of $37 million. The shares last traded at $3.05 and have risen around 27% this year.
Contract Resources mainly services the oil and gas sector, generating 90% of its revenue from offshore activity. These include catalyst handling and a wide range of environment and industrial services.
It major operation is in Australia but its reach extends to the US, Middle East, Asia and South America.