Bradken Limited (BKN) announced two acquisitions for a total consideration of A$222 million. These acquisitions are expected to deliver A$28 million of additional EBITDA in 2011/12, including synergies, and will be funded from current cash and debt facilities. Both businesses largely produce and sell differentiated wear parts for mining, and support Bradken’s key strategy of growing the company’s core consumable businesses. Bradken has acquired Australian and Overseas Alloys Pty Limited based in Wollongong, New South Wales for a total purchase price of A$20 million.. The AOA business, which produces a range of wear plate products for the mining industry, has particularly strong manufacturing technology, producing high quality, low cost wear plate products. The acquisition will provide significant synergies in manufacturing, providing extra capacity and technology which can be leveraged across the existing Bradken plants. This business will be managed by Bradken’s Fixed Plant Business, a part of the Mining Products Division and is expected to add approximately A$9 million of sales and A$6 million of gross margin in 2011/12.
Bradken has entered into a binding agreement with entities associated with Castle Harlan, Inc. to acquire Norcast for a total acquisition cost of A$202 million (including costs). Norcast, whose head office is in Toronto, Canada, and its main production facility based in Mont Joli, Canada, is a manufacturer of cast steel Mill Liners for the global mining market. In combination with Bradken’s Mineral Processing Business, Bradken will now become the largest global supplier of these mining consumables with sales into all major mining regions including Australasia, North & South America and Africa. The acquisition significantly increases Bradken’s market share in North & South America and Africa for these products. The acquisition of this business significantly strengthens Bradken’s worldwide sales and distribution network which can be leveraged across other consumable wear parts. The acquisition includes Swanmet, a Malaysian foundry group acquired by Norcast in March 2010. Swanmet currently manufactures and sells wear parts into mining and energy markets including Australia. Swanmet offers significant low cost capacity for the manufacture of mining consumables including Crusher Liners and Ground Engaging Tools (GET).
Commenting on the acquisitions, Managing Director Brian Hodges said, “The acquisitions are in line with Bradken’s strategy of globalizing its consumable products businesses and building a substantial presence in the world’s major mining regions. Norcast provides world class manufacturing operations in Canada and a leading position in the global supply of Mill Liners. AOA increases our presence in the Australian wear plate market and provides strong manufacturing technology.”
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