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28-07-2015, 11:18 PM
Mining services mega merger in the pipeline
THE AUSTRALIAN JULY 29, 2015 12:00AM
Bridget Carter
Mergers & Acquisitions Editor
Sydney
Gretchen Friemann
Mergers & Acquisitions Editor
Sydney
Mining services companies at the centre of aggregation plan Source: TheAustralian
A mega merger between mining services companies worth a collective $5 billion could be afoot, with suggestions that private equity firms are working on a major aggregation plan for the dominant industry players, which are all being hit by the resources sector downturn.
It is understood that private equity firms Pacific Equity Partners, Champ and Kohlberg Kravis Roberts, which already owns the challenged mining services provider Bis Industries, are among those examining the possibilities for bringing businesses together in the same sector.
Companies said to be under scrutiny as part of such are move are Bradken, Magotteaux, Esco, MeElecmetal, CQMS Razer and Arrium’s Moly Cop. Austin Engineering could also be in the mix.
Collectively, the companies are worth more than $5bn, but sources say that more realistically a deal worth about $3bn could be in the fold over time.
Already, Bradken looks set to be acquired by Magotteaux, a subsidiary of Chile’s Sigdo Koppers, as part of a recapitalisation deal a month ago involving Champ Private equity.
As part of the arrangement, Champ and Sigdo Koppers agreed to inject $70m into the business on the basis that the Sigdo Koppers subsidiary, Magotteaux, had the option of buying Bradken within 60 days.
Interestingly, UBS advised Sigdo Koppers on its deal with Bradken and is also one of the banks working with Arrium on its divestment of Moly Cop.
One suggestion is that the advisory firm could be looking at ways to bring the companies together, potentially on behalf of another private equity firm such as PEP, although others believe such a play would be doubtful, with Magotteaux unlikely to be able to own Moly Cop due to anti-trust concerns, but its bidding partner Champ could potentially be a buyer.
The sales process for Moly Cop is said to be imminent, with PEP in conjunction with Koch Industries, KKR and Carlyle all said to be circling. US-based Esco also is believed to have made advances for Bradken in the recent past, while Bradken itself has previously made advances for its Quadrant-owned rival CQMS Razer.
Mining services companies are facing overwhelming challenges remaining profitable as the resources downturn continues to bite, and consolidation has widely been mooted as the only option if they are to survive.
All have struggled in various countries, but the logic behind such a strategic amalgamation move is that all groups have regions where they perform strongly, and they manufacture equipment used for mining that is considered complementary.
THE AUSTRALIAN JULY 29, 2015 12:00AM
Bridget Carter
Mergers & Acquisitions Editor
Sydney
Gretchen Friemann
Mergers & Acquisitions Editor
Sydney
Mining services companies at the centre of aggregation plan Source: TheAustralian
A mega merger between mining services companies worth a collective $5 billion could be afoot, with suggestions that private equity firms are working on a major aggregation plan for the dominant industry players, which are all being hit by the resources sector downturn.
It is understood that private equity firms Pacific Equity Partners, Champ and Kohlberg Kravis Roberts, which already owns the challenged mining services provider Bis Industries, are among those examining the possibilities for bringing businesses together in the same sector.
Companies said to be under scrutiny as part of such are move are Bradken, Magotteaux, Esco, MeElecmetal, CQMS Razer and Arrium’s Moly Cop. Austin Engineering could also be in the mix.
Collectively, the companies are worth more than $5bn, but sources say that more realistically a deal worth about $3bn could be in the fold over time.
Already, Bradken looks set to be acquired by Magotteaux, a subsidiary of Chile’s Sigdo Koppers, as part of a recapitalisation deal a month ago involving Champ Private equity.
As part of the arrangement, Champ and Sigdo Koppers agreed to inject $70m into the business on the basis that the Sigdo Koppers subsidiary, Magotteaux, had the option of buying Bradken within 60 days.
Interestingly, UBS advised Sigdo Koppers on its deal with Bradken and is also one of the banks working with Arrium on its divestment of Moly Cop.
One suggestion is that the advisory firm could be looking at ways to bring the companies together, potentially on behalf of another private equity firm such as PEP, although others believe such a play would be doubtful, with Magotteaux unlikely to be able to own Moly Cop due to anti-trust concerns, but its bidding partner Champ could potentially be a buyer.
The sales process for Moly Cop is said to be imminent, with PEP in conjunction with Koch Industries, KKR and Carlyle all said to be circling. US-based Esco also is believed to have made advances for Bradken in the recent past, while Bradken itself has previously made advances for its Quadrant-owned rival CQMS Razer.
Mining services companies are facing overwhelming challenges remaining profitable as the resources downturn continues to bite, and consolidation has widely been mooted as the only option if they are to survive.
All have struggled in various countries, but the logic behind such a strategic amalgamation move is that all groups have regions where they perform strongly, and they manufacture equipment used for mining that is considered complementary.