Lycopodium announced today it has entered a non-binding agreement to acquire a majority stake in South African based engineering business ADP Holdings.
Lycopodium announced today it had entered a non-binding agreement to acquire a majority stake in South African-based engineering business ADP Holdings.
Perth-headquartered Lycopodium said it was currently undertaking due diligence on ADP and would make a final decision before the end of June 2014.
ADP Holdings core business, through its projects division, is the provision of engineering, procurement, construction and management (EPCM) services and EPC projects to the mining industry.
The company web site describes it as a “leading supplier of modular processing plants and projects in the diamond mining industry”, but it also services the mineral sands, coal and gold sectors.
ADP Holdings also has a marine and modular division, and a procurement division.
It was established in 1997 and is based in Cape Town.
“The target business has a strong track record in the African market and its expertise across a range of mineral commodities, coupled with its regional skills base, would be complimentary to Lycopodium,” the company stated.
“The considerable synergies between the businesses would significantly enhance Lycopodium’s commodity expertise and project capabilities within Africa.”
Lycopodium has a major presence in Africa with a total of 15 minerals project, seven infrastructure projects and one asset management project either completed or yet to complete.
Total revenue for the past financial year was $251.6 million, with a net profit after tax of $22.5 million.
Out of the total revenue realised last year, $192.9 million came from minerals and $29 million from project services in Africa.
This potential acquisition of ADP Holdings “would be funded from cash reserves and there would be no additional equity or debt required”.
While last year’s revenue was the highest since 2008, Lycopodium has forecast its revenue to decrease to $140 million-$170 million and a net profit after tax of $11.4 million-$13.8 million in this financial year.
“Completion of the potential transaction will enhance Lycopodium’s revenue in the longer term given the potential growth of the African business,” the company said.
The agreement is ‘non-binding and indicative’ only and there is no guarantee that a formal agreement will be realised.
