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Mincon expands in Sweden with Driconeq acquisition
Mincon has completed acquisition of Driconeq AB, the holding company for the Driconeq Group of companies, it announced on Tuesday.
The AIM-traded firm described Driconeq as a global supplier of high-quality drill pipes and accessories for down-the-hole (DTH), rotary and reverse-circulation applications with factories in Sunne, Sweden, Johannesburg, South Africa and Perth Australia.
An integral part of the group was the heat treatment business, HARDtekno, located in Kristinehamn, Sweden.
The combined businesses for the financial year ended 31 December had revenues of SEK 254m, SEK 18.4m of EBITDA, and operating profit of SEK 9m.
That equated to approximately 25.2m of sales, 1.82m of EBITDA, and an operating profit of about 0.89m.
Altogether, another 125 staff would join the Mincon Group with the acquisition, the board said.
It added that the net assets being acquired, after certain adjustments, totalled approximately SEK 45m, and confirmed there was no debt being brought on as part of the transaction.
The agreed price was SEK 65m, plus the buy-in of a minority interest in a subsidiary for SEK 6.95m, as well as a contingency payment based on performance in 2018 of up to SEK 5m.
Together with costs the whole transaction, with full pay-out, would total some SEK 81m.
The payment would be made from the cash resources of the Mincon Group.
Mincon said the factories were an "excellent fit" for ots manufacturing and business footprint, being close to existing key Mincon facilities and management, and giving the group a worldwide brand in drillpipe and associated products.
Since Mincon was already a large customer of Driconeq, accounting for approximately 4m of Driconeq's revenue in 2017, such revenue would not be an addition to the group's revenue, but the board said it would expect Driconeq to add net 21m of sales, and develop their profitability over the rest of the current year to make a contribution from the date of acquisition.
Mincon's current drill pipe manufacturer Viqing Group - which it acquired last year - would be combined with the Driconeq Group, and add its sales to the product category for the group.
The management teams in Sunne, where both businesses were headquartered, would also be merged as agreed.
"We are delighted to add these businesses and their teams to our group," said chief executive Joe Purcell.
"We are at heart an engineering group, an industrial group, and these businesses should receive an opportunity to grow and develop over the coming years."