22 March 2011

Imdex Limited (Imdex; ASX: IMD) is pleased to announce that it has executed a Sale & Purchase Agreement to acquire Mud-Data GmbH and Mud-Data-Rom S.R.L. (Mud-Data), a drilling fluids and equipment supplier to the oil & gas and geothermal markets in Europe.

Bernie Ridgeway, Managing Director of Imdex said that there was a strong strategic rationale for the acquisition.

“The acquisition of Mud-Data is a strategic acquisition with strong synergies and compelling financial logic. It will substantially increase Imdex’s footprint in Europe, a market which has very attractive growth opportunities.

“The acquisition is complementary to our existing drilling fluids & chemicals business. It will deliver an expanded product range, excellent capabilities and enhances exposure to the oil & gas and geothermal industries in Germany and neighbouring countries.

“Mud-Data will also provide a potential cost effective design and manufacturing base for AMC’s solids control technology, furthering Imdex’s goal to become a leading provider of solids control equipment globally.

“We expect Mud-Data to be a significant contributor to Imdex’s revenue, with the acquisition to be earnings accretive in FY12,” said Mr Ridgeway.

Acquisition cost

The potential acquisition of Mud-Data was announced on 17 December 2010. Following completion of Imdex’s due diligence, the purchase consideration was amended to the following:

• €1.3 million in cash on settlement
• A further 3.7 million in cash and shares, conditional on certain operational milestones being achieved; and
• A conditional earn-out equivalent to 1.065% of certain contract revenue of Mud-Data GmbH in the financial years 2011-1015, inclusive.

The acquisition is funded from existing cash resources.

Earnings accretive

The acquisition of Mud-Data is expected to be earnings accretive in FY12 with the business estimated to generate A$12-15 million in revenue at a 20% EBIT margin. There will be minimal profit contribution in FY11.