CARDNO CONTINUES ACQUISITION STRATEGY

CARDNO (CDD) has increased its presence in Western Australia with the acquisition of construction materials testing (CMT) firm Geotech.

The move expands Cardno’s CMT expertise nationwide, with existing division Cardno Bowler already active in Queensland, New South Wales and Victoria.

“Acquiring Geotech strengthens the Cardno Bowler Division and allows us to expand on the services we can provide to our existing Western Australian clients and increases our exposure to work in the mining and oil and gas markets in Western Australia,” managing director Andrew Buckley (pictured) says.

Cardno will pay up to $26.7 million for Geotech, with about 30 per cent of the purchase price subject to the achievement of performance targets over the next 12 months, with an additional 3 per cent of the purchase price deferred for 24 months.

The acquisition will be funded by an approximate mix of 75% cash and 25% shares. Around 650,000 shares will be issued at a price of $6.91. The cash component will be funded from available cash reserves.

Cardno was trading at $7 per share late this afternoon, up 0.87 per cent on the previous day’s close.

Geotech services clients on major mining, liquefied natural gas (LNG) and government infrastructure projects, such as the multi-billion dollar Gorgon LNG project.

Its team of 190 staff operate from mobile laboratories throughout Western Australia, with headquarters in Bunbury.

Geotech managing director Steve Pederick says the acquisition will open up significant new growth opportunities for the firm.

Cardno predict the purchase will contribute $23 million in revenue and $5.3 million earnings before interest and taxes (EBIT) over the next 12 months.

Read more about Cardno’s success in the exclusive interview with Andrew Buckley in the February edition of Brisbane Business News.