PEP, Bain offer $731m for Australia’s Bradken

The private equity firms are willing to pay A$5.10 per share for all outstanding shares in Bradken, according to a regulatory filing. This follows a bid of A$6.00 per share submitted in August that did not result in a firm offer.

Bradken's board noted that the offer has come "at a low point in the mining cycle during a time of significant share price volatility in the broader mining services sector." Shares in the company had fallen 45% since the start of the year, ahead of the offer being disclosed. They are up 36.5% today at A$4.53.

Founded in 1922, Bradken produces milling and crushing equipment used in mineral processing as well as mining equipment, cast metal services, and products for the transport and general industrial sectors. It employs over 5,000 people and operates 57 manufacturing, sales and services facilities in Australia, New Zealand, the US, Canada, China, Malaysia, South Africa, Indonesia, the UK and South America.

Net profit dropped 68% year-on-year to A$21.5 million for the 12 months ended June 2014. Revenue fell 14% to A$1.13 billion while EBITDA was down 22% at A$143 million.

Bradken relies on the resources sector for 92.5% of its revenues, with 26.2% alone tied to iron ore mining and processing activities. Australia and New Zealand account for nearly half of revenue. The company has been particularly badly hit by falling demand for crawler systems and other excavation equipment as Australia's miners scale back operations.

Several initiatives have been launched to deliver growth independent of the mining cycle, including the closure of several foundries in Australia, which are expected to help reduce costs.

Bradken is not the only Australian mining services player to draw interest from private equity in the current difficult commercial environment. Last month Centerbridge Partners announced it would support a $352 million restructuring plan for Boart Longyear.

PEP offered A$1.1 billion for SAI Global, a listed Australian risk management and standards compliance business, earlier this year. It subsequently joined forces with KKR on the deal but they declined to submit a final offer after conducting extensive due diligence.

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• Topics
• Industrials
• Buyouts
• Australasia
• buyout
• Australia
• Commodities
• manufacturing
• Pacific Equity Partners
• Bain Capital Asia