Babylon Pump & Power (ASX:BPP) has entered into a binding agreement to acquire Western Australian-based pump hire, hydrotesting, and water project solutions company Blue Hire.
The specialty mining services firm says the acquisition enhances its position in the high-margin rental segment and demonstrates continued execution of Babylon’s growth strategy following its recent proposed acquisition of Matrix.
Babylon intends to complete the acquisitions of Matrix and Blue Hire on or around 30 June 2025 and has completed due diligence in relation to Blue Hire.
Blue Hire founder Byron Ynema will join Babylon post-acquisition and take responsibility for managing the combined rental fleet.
All related party loans owing to Blue Hire totalling $9 million in aggregate, will be repaid to Blue Hire at or immediately following completion of the proposed acquisition.
To fund the acquisition, Babylon has received a term sheet from NAB for a loan of up to $21.2 million to finance the transaction and refinance an existing term loan of $2.8 million.
An existing $5.1 million debtor finance facility will remain unchanged and a revolving lease facility will be reduced from $5.5 million to $5 million.
Babylon expects the Blue Hire acquisition to add significant earnings power and margin enhancement, based on the financial performance of the target for the 2024 and preceding financial years.
On a pro forma basis, including the contributions from both Matrix and Blue Hire, Babylon FY24 group revenue would have been some $54 million with EBITDA of $14 million.
“Blue Hire’s strong EBITDA margin is expected to provide an immediate uplift to Babylon’s overall profitability,” the company says.
The proposed transaction of Blue Hire, at completion, includes consideration of $16.350 million; shares in the capital of Babylon equal to a value of $1.65 million based on the five-day VWAP preceding the date of issue; and a deferred minimum payment of $6 million and a maximum of $8.20 million based on performance, to comprise of 85% cash and 15% shares in Babylon.
Blue Hire is a specialist provider of high-performance pump hire, hydrotesting, and water project services. With over a decade of operating experience, Blue Hire services clients across the mining, industrial, marine and agricultural sectors, delivering tailored fluid transfer and pressure testing solutions across regional Western Australia.
The target’s fleet comprises of pumps, generators and other water management ancillary items. Blue Hire’s strong regional client base is highly complementary to Babylon’s operations. Notably, Babylon says there is no overlap in clients between the two businesses, enabling synergistic fleet utilisation and cross-selling opportunities.
Babylon Pump & Power provides specialty mining services to the resources sector in Australia. The company is a specialist in high-pressure pumping, dewatering and project water management with decades of experience supplying and maintaining equipment in remote and offshore locations.
Babylon also provides a full range of specialty power generation solutions, including system design, installation, commissioning, operations and maintenance services.
Write to Adam Orlando at Mining.com.au
Images: Blue Hire
