Perth-based infrastructure services group Cardno Limited certainly picked the right day to reveal a $100 million deal in the US and a fund raising of the same size.
It picked the best trading day on the market for more than a week, and also scored on the currency side of the deal with the Aussie dollar around three month highs, which made the US dollar price that much lower.
With the wider market up around 1% or 44 points, Cardno told the market before trading started yesterday that it was buying US group ATC Associates (a specialist in environmental consulting and services, building sciences, geotechnical engineering and construction materials testing for a total of $US106 million (A$99 million).
Cardno said it will pay $US101 million on settlement next month and another $US5 million in 18 months. The transaction is expected to be effective 1 March 2012.
A deal a month ago might have cost a million or two dollars extra, but the Aussie dollar has been trading around $US1.07 for the past five days.
Cardno said the purchase will be funded through a $A45 million placement already made, and a 1 for 9 Renounceable Rights Issue to existing shareholders which will raise an additional $66 million approximately.
The acquisition of ATC is expected to contribute approximately US$130 million in revenue and US$16 million in EBITDA to Cardno over the next 12 months.
The placement was done at $4.90 a share, a discount to Friday’s closing price of $5.99. The rights issue will be done at the same price.
Cardno shares jumped 16c to $6.15 as investors took the deal and fund raising in their stride.
Cardno Managing Director Andrew Buckley said in a statement that the deal is in line with Cardno’s proven strategy.
He said ATC’s key management will remain active in the company, which will be known as Cardno ATC.
Mr Buckley said the addition of Cardno ATC will further strengthen Cardno’s exposure to the USA’s environmental and natural resources management market and is highly complementary to Cardno’s existing businesses in the US.
Mr Buckley added that ATC will provide Cardno with broader access to key US clients such as oil, gas and energy companies and major contractors and retail groups.
With the addition of ATC 100 people, Cardno’s staff numbers will grow to in excess of 6,200 worldwide, operating from over 250 offices.
Cardno’s Chairman John Massey said in the statement that, "The acquisition of ATC provides further diversity of professional environmental services for Cardno and strengthens Cardno’s strong base in the growing U.S.A. environmental market.
"Following our profit guidance announced on 19 January 2012 of NPAT in the range of A$34 to A$36 million for the half-year ending 31 December 2011, the Board is expecting generally improving conditions and ongoing organic growth. Combined with our other recently announced acquisitions, we anticipate a strengthening performance through to FY13.
"In addition, following our A$111m capital raising, Cardno has the financial flexibility to pursue its organic growth and continue to fund its acquisition strategy globally," he said
Under the rights issue, shareholders who take up their full entitlement will be able to apply for additional shares at the same issue price of $4.90 a share.
Cardno said new Shares issued under the issue will rank equally with existing ordinary shares on issue and will be entitled to the interim dividend.
