Global mining-tech company IMDEX has entered a binding agreement to acquire its main competitor in a A$300 million-plus deal that will reinforce its market-leading position in mining technology and deliver increased market penetration.
The proposed acquisition of Norwegian-based Devico AS, a leading provider of advanced sensors and the leader in directional drilling technologies, is expected to be completed by late February.
The proposed acquisition has an implied enterprise value of $324 million.
IMDEX Chief Executive Officer Paul House said the proposed acquisition was a highly significant investment that extended IMDEX’s core business in both geographical reach and technology capability.
The addition of Devico would strengthen IMDEX’s position as the leading provider of advanced rock knowledge sensors and establish the business as the number one directional drilling technology company globally.
Devico’s portfolio of rock knowledge sensors complements IMDEX’s existing technology.
Through increased scale and market penetration, particularly in Europe and South America, IMDEX would further expand its presence on mine sites, opening further opportunities for its solutions to be delivered to established customers.
Under details announced today, IMDEX will acquire 100 per cent of the issued and outstanding shares in Devico, and Devico’s select minority interests in subsidiaries and joint ventures, for $334 million.
It intends to raise up to $224 million through an underwritten institutional placement, entitlement offer and conditional placement.
The conditional placement is to allow certain IMDEX directors and management to subscribe for new shares under the equity raising, subject to shareholder approval being obtained at an upcoming extraordinary general meeting. All eligible non-executive Directors have invested in the conditional placement.
The institutional issue share price of $2.20 per share represents a 10.9% discount to the last traded price of A$2.47 on 17 January 2023.
The entitlement offer will be conducted at the offer price of A$2.20 per new share. The offer price represents an 8.9% discount to the Theoretical Ex-Rights Price of A$2.42 per share on 17 January 2023 (TERP); and a 10.9% discount to the last closing price of A$2.47 per share on 17 January 2023.
Up to $120 million will be drawn from a new term loan, and $9 million will come from key Devico management reinvesting a portion of their proceeds from the proposed acquisition into IMDEX shares.
Devico services mining and civil industries globally, has world-class facilities located in a key hub in the Scandinavian mining market, and strong research and development capabilities.
It has a track record of commercialising innovative mining technologies and a commodity agnostic product offering which complements IMDEX’s core business.
It has achieved exceptional year-on-year growth and attractive and a high-quality and diversified customer base.
Mr House said IMDEX saw significant value in combining the complementary product portfolios, market-leading R&D capabilities and global presence.
“Devico’s flagship facility in Trondheim will become a key asset for IMDEX – providing us a new innovation and manufacturing hub for the European market,” Mr House said.
“Devico’s expertise, professionalism and their relentless customer focus matches our own and we are excited about what our teams can achieve together for the mining industry. We have commenced integration workstreams and are confident in a smooth transition.”
Devico has a workforce of 200 personnel across 15 locations around the world.
The existing management and technical team at Devico are seen as a key asset for IMDEX and are expected to remain after the acquisition.
Devico is expected to deliver CY2022 revenue of about $61 million and EBITDA of $29 million and has demonstrated its ability to scale its business over the past three years with a revenue CAGR of 17 per cent per annum.
About 46 per cent of Devico’s revenue is generated from its sensors and 56 per cent from its directional drilling technologies.