Neptune Marine Services to Acquire Subsea Developments Australia
Neptune Marine Services has signed a letter of intent to acquire Subsea Developments Australia. The acquisition will significantly strengthen Neptune's presence in the subsea oil and gas services market.
Headquartered in Perth with a team of forty, Subsea Developments is a specialized consulting firm in the oil and gas sector. The business provides a broad range of services encompassing front end engineering and design (FEED), installation/construction engineering and inspection repair and maintenance with a focus on pipeline and subsea engineering.
The business was co-founded by Russell Collins and David Husband in 1999. Both have extensive experience in the oil and gas sector. They will remain with Neptune for a minimum of three years and will form part of the company's leadership team. The acquisition is subject to due diligence and formal contract documentation.
Neptune will make an upfront payment of A$5.5 million plus three year earn-out based on Subsea's EBIT performance. Payments by Neptune will consist of 55% case and 45% Neptune shares. The business is expected to add about $10 million in annualized revenue and, upon settlement in FY Q3 will make an immediate contribution to Neptune's earnings per share.
Neptune's Managing Director Christian Lange said, "this is the most strategically important acquisition Neptune has announced and is consistent with our Strategy for Growth. It brings to the company high-end management and consultancy capabilities which significantly broaden our offering to customers in the oil and gas sector.
It also gives us the platform to establish Neptune as Australia's only listed broad-based oilfield services company.
"Subsea developments has undertaken projects for a range of blue chip companies. Coupled with Neptune's other service capabilities, we will be able to provide customers in the oil and gas sector with fully integrated 'cradle to grave' services in the one contract.
Subsea Developments Directors, Russell Collins and David Husband said "Subsea Developments has been seeking a strategic partner in order to add significant growth opportunities to our business. Neptune provides an exciting combination of senior management, funding and niche services such that the combined group moves forward with a solid foundation for growth in both Australian and International markets."
Mr. Lange said Subsea Developments is the fourth acquisition Neptune has announced in six months and the company has structured the transaction to ensure integration risk is minimal, the management teams in each business remain committed and incentivized, and each business brings synergistic opportunities to Neptune.
"Neptune is fast-tracking its growth through acquisitions, and this has been a well thought out and measured approach. Synergies between the businesses are very much apparent and fit with our overall growth strategy. We are well equipped to manage growth and are encouraged by Neptune's prospects."
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