Mining services firm Macmahon has purchased WA underground mining contractor GBF Group for an up-front component of $48 million in cash and assumed debt.
The deal, which will widen Macmahon’s exposure to the gold sector, was flagged by The West Australian earlier this month.
Macmahon chief executive Michael Finnegan said his firm had a strong surface mining division and the acquisition would help it scale its underground contracting business, helping clients who just want to deal with one contractor for the life of a mine.
“There are also potential synergies to be realised as the two businesses are combined, but growth is the key driver of the transaction,” Mr Finnegan said.
GBF founders Michael Foulds and Ross Graham will continue in the business with the possibility to receive earn-out performance payments.
The pair founded the company in 1988 to service the WA Goldfields.
GBF employs 450 people and its brand and key personnel will be retained, Macmahon said.
This financial year GBF is forecast to generate $180 million in revenue and $20 million in earnings before interest, tax, depreciation and amortisation.
The acquisition is expected to be earnings per share accretitive immediately, Macmahon said.
Macmahon shares were unchanged at 19.5¢ at 9am.