WestStar Industrial buys local construction company, diversifies service offering
Alltype Engineering is an Australian oil and gas focussed provider of steel fabrication, installation and maintenance services.
Perth-based construction group WestStar Industrial (ASX: WSI) will acquire privately-owned local fabrication and construction company Alltype Engineering Pty Ltd in a fully-funded transaction designed to provide scale and diversification for the group.
The acquisition will be based on an upfront initial consideration of approximately $5.9 million in WestStar shares (based on a volume weighted average price) and a deferred consideration subject to Alltype achieving key performance targets for the 2020 financial year.
If the performance targets are not met, the deferred consideration will be scaled back to zero.
Both tranches will be escrowed 12 months from issue.
Alltype’s management team will join WestStar’s executive line-up, bringing with them approximately $4m of property, plant and equipment assets.
De-risk operations
WestStar said the acquisition would expand and de-risk the company’s operations by broadening its service offering, bringing contracted recurring revenues, and providing a customer base across the oil and gas, water and power generation sectors.
“Alltype is a well-established and respected name and [we] look forward to pursuing strategic integration opportunities, along with a greater diversity in disciplines and [Alltype’s] proven client relationships,” said chief executive officer Robert Spadanuda.
“This acquisition broadens [our] horizons and will significantly accelerate [us] towards increased revenues and earnings.”
Earnings track record
Established in 1985, Alltype provides workshop fabrication, site installation, construction and maintenance services to industries including infrastructure, mining, utility, petrochemical and defence, in private and public sectors.
The company’s head office and manufacturing facilities – including a 7000 square metre fully-equipped workshop near Kwinana – are close to rail, road and port transport infrastructure and ready access to supply chain support and services.
Alltype has a track record of sustainable earnings, delivering revenues in excess of $250m over the past 13 years.
In 2019, it delivered $29.8m in revenue and $2.0m in earnings before interest, tax, depreciation and amortisation.
Alltype’s executive management team, including managing director Kelvin Andrijich and chief operating officer Colin Heitman – who are also part owners in the business – will continue to manage Alltype from their new roles within the WestStar team.
At midday, shares in WestStar Industrial were steady at $0.025.