Corporate: Mitchell Services is snapping up fellow driller Deepcore for $32 million
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Drilling rig provider Mitchell Services (ASX:MSV) is expanding on the eastern side of the Nullarbor, announcing it will acquire Bendigo-based Deepcore Drilling.
Mitchell will pay $32 million ($17 million in shares and $15 million in cash) for Deepcore.
The company has said the move balances its commodity mix (into gold and copper), diversifies its holdings in the eastern states. and offers speciality acoustic drilling services that it does not currently provide.
The acquisition will be 38.5 per cent earnings per share accretive based on pro forma financials.
Deepcore will remain a stand alone brand and founder Scott Tumbridge will join Mitchell Services as an executive director.
Shareholders welcomed the acquisition, sending shares up 11 per cent this morning.
Last financial year Mitchell made $120 million in revenues and $17.37 million profit after tax. The momentum has continued into this financial year with $33.5 million in revenue and $6.2 million in earnings before tax, interest and depreciation.
One of Australia’s largest industrial services providers Boom Logistics (ASX:BOL) has cut its earnings guidance from $24-$28 million to $20 million.
It attributed delayed recovery in mining maintenance work in New South Wales, cut due to lower coal export prices. But negotiations with new clients were ongoing and new work was to be expected soon.
Additionally it blamed clients delaying construction projects but it expected an uplift in activity in the second half. Managing director Tony Spassopoulos said the adjustment was disappointing but anticipated earnings in the 2nd half of this financial year would be better.