Babylon acquires Qld outfit

Resources services provider Babylon Pump & Power has entered into a conditional agreement to acquire diesel engine specialist Primepower Queensland for up to $4.2 million.

Under the deal, Babylon will pay $1.7 million upfront in cash and $600,000 in shares issued at 2.4 cents per share.

Additionally, there will be a $1 million deferred cash payment adjusted for net asset value and a further $500,000 if performance targets are met.

Babylon said it would undertake a $1.5 million share purchase plan to help pay for the acquisition.

Shares will be issued at a 20 per cent discount to the five-day volume-weighted average price of its shares prior to the issue.

Patersons Securities is lead manager and underwritter to the offer.

In addition, Babylon has prosposed to raise a further $1.5 million via a top-up share placement. 

Investors welcomed the news, with Babylon’s shares up 14.3 per cent to 2.4 cents at noon AEST.

Babylon said the acquisition would enhance its engine re-build capabilities and expand its East Coast footprint and provide it with market entry for its existing speciality equipment business in Queensland.

The company said Primepower has a three-year average annual revenue of approximately $8.9 million, with clients including Fortescue Metals Group, Wesfarmers and Peabody.

Post-acquisition, Babylon said it expects revenue of over $25 million in the second half of the 2020 financial year.