Cardno Makes Strategic Acquisition of Underground Services Company
Source: Cardno - www.cardno.com.au
14 May 2010
International infrastructure services group, Cardno Limited (ASX: CDD)
today announced the highly strategic acquisition of Australian
Underground Services Pty Ltd (AUS), an Australian based utility
detection and mapping services firm with around 30 staff based in
Victoria.
AUS is expected to
contribute revenue of around AU$5 million to Cardno annually. Cardno
will pay AU$6.0 million for AUS on an enterprise value basis plus an
earn out of up to AU$1.0 million if calendar year profit targets are
achieved. AUS is expected to deliver EBIT of around AU$1.7 million for
FY11. The effective date for the transaction will be 1 April 2010 and it
is immediately earnings per share accretive.
AUS brings to Cardno a
utility detection and mapping services business which undertakes
services location through surface geophysical technologies, state of the
art non-destructive vacuum excavation and data management services.
“Further developing our
services locating business is a strategy that Cardno has been targeting
since the acquisition of Cardno TBE in late 2008” said Cardno Managing
Director, Andrew Buckley. “The acquisition of AUS will allow us to
transfer our professional subsurface utility engineering (SUE) global
expertise from Cardno TBE, based in Tampa Florida, to Australia and
leverage off AUS’s existing client base. Cardno TBE has already
successfully achieved this in Canada and the UK”.
Cardno believes that
the Australian infrastructure market is ready for the introduction of
SUE as a means of improving the accuracy of the utility information used
for design and construction of physical infrastructure projects. It is
documented that SUE will reduce costs and provide accountability through
the certification of the location, identification and mapping of
underground utilities prior to construction.
“We see AUS as a highly
strategic partner to help drive the growth of SUE services in Australia
and we are already looking to establish a presence in other Australian
states”, said Mr Buckley.
AUS has developed a
solid client base since commencing operations in January 2005, which
includes state road authorities, national contractors and major
engineering consulting firms.
Mr Buckley noted that
Cardno is currently working with Standards Australia to introduce a
standard for SUE services for Australia and New Zealand along the lines
of the standards used in the US and Canada.
Scott Guy, Managing
Director and founder of AUS, said the acquisition by Cardno will enable
AUS to increase its service offering and be positioned to be the premier
provider of SUE services for Australia.
The acquisition will be funded with an approximate
mix of 75% cash and 25% shares. Initially, around 375,500 shares will be
issued at a price of $3.99477. The cash component will be funded from
available cash reserves.
Mr Buckley said that
Cardno’s balance sheet remains strong following the acquisition and the
company continues to focus its strategy to grow organically and by
acquisition.
“We see further
strategic opportunities for Cardno through our M&A pipeline this year,”
he said.