IPD Group (ASX:IPG) is acquiring Australian cables provider for the mining and resources sector Platinum Cables for a total consideration of $37.5 million.
The consideration comprises $37 million in cash and $500,000 in IPD shares, followed by a contingent cash consideration of up to $7.5 million dependent on earning before interest and taxes (EBIT) growth over the next year.
IPD will pay the contingent cash consideration on the return of five times the growth on EBIT. The pro forma EBT margin for FY25 will increase to 11.6%, with total debt drawn at completion to be marked at $48.6 million, due to IPD’s existing $11.1 million debt.
This acquisition will be funded by IPD’s expanded core debt facility with CBA – which has a $56.1 million limit – with the recently agreed $10 million working capital facility.
Platinum’s management team will operate business as usual as a stand-alone entity under earn-out arrangements.
IPD Chief Executive Michael Sainsbury says the acquisition reflects a continuation to the company’s growth strategy that reinforces its “leadership in the mining sector and delivers immediate earning accretion for shareholders”.
“The Platinum Cables business is highly complementary to our combined IPD and CMI business units and is leveraged to the same tailwinds, including the electrification of the Australian economy,” Sainsbury says.
“With their strong track record of organic growth and the potential for significant revenue synergies, we look forward to the Platinum Cables team joining IPD Group.”
Platinum Cables provides high-performance cable solutions for the mining and resources sector, specialising in supplying power, communication, and optimal fibre cables suitable for harsh and remote environments.
IPD Group is focused on enhancing electrical infrastructure as a provider of electrical solutions in energy management and automation.
Write to Maddison Elliott at Mining.com.au
Images: Platinum Cables
