Ann: NRW confirms MACA (MLD) approach, page-25

Low volume though Parma ….?

https://www.theaustralian.com.au/bu...y/news-story/6cd7fb965d901a9d8e20440129b0484f

Consolidation in mining services finally under way

NRW Holdings’ rival bid for MACA shows that the long-awaited consolidation in the mining services space is finally unfolding.

• BRIDGET CARTER
  DATAROOM EDITOR
  
• 10:32AM AUGUST 19, 2022

NRW Holdings’ rival bid for MACA shows that the long-awaited consolidation in the mining services space is finally unfolding.

Groups have been talking for years about tie-ups, but there’s always been a lack of agreement on price.
Thiess has got the ball rolling with its original $350m takeover bid for MACA last month, and while NRW’s offer works out to be $375m the fact that it is cash and scrip and not fully financed yet are the deterrents for the MACA board to accept.

Thiess and MACA were in talks about a deal last year, according to speculation in the market (denied by MACA at the time). There has also been much chatter about a merger between Perenti and Macmahon, although Perenti also says it is not true that it has been considering such a proposal.

Still, the noise about mergers is undeniable. Part of the problem is that there has been no meeting of minds about value between prospective partners.

NRW’s results released to the market on Thursday showed it was in great shape for M&A.
Its annual net profit to June 30 soared 79.4 per cent to $97.4m, its order book grew to $5.2bn and it has low debt at 11 per cent.
It has defied the industry challenges including staff shortages, higher costs, severe weather events and fewer projects in civil construction.
Some infrastructure and mining clients deferred projects due to market conditions.
NRW is also cashing in on higher demand for mining equipment, technology and services on the back of booming demand for battery minerals.
It has a $1bn market value, and its shares rose almost 5 per cent on Thursday’s result.​

Consolidation among mining services providers is being driven by the fact that equity investors are not ascribing large values to industry participants. They are deterred by the sector’s low margins and high capital investment costs.

MACA and NRW cross over in the mining contracting space in Australia, but NRW also provides civil and engineering contracting services.
MACA has one project in Cambodia, but pulled out of the Brazil market
(NRW!,,)It purchased BGC Contracting in 2019.(sic)

NRW shareholders are backing the bid for MACA. They say that MACA’s mining business is superior to NRW’s and adds staff in a tight employment market, adding that a deal would likely boost NRW’s earnings by about 15 per cent.
Like BHP’s recent bid for OZ Minerals, it shows that it makes more sense for companies to acquire rivals in resources than to build a business themselves.

One analyst said they were surprised by NRW’s move.
But they said it made sense to a degree, because it was acquiring machinery for below its value or net tangible assets, which analysts at Canaccord say is worth $1.12 per share for the 2022 financial year.

They believe that NRW has the capacity to return with a higher bid.

Macquarie Capital, Lisle Group and Squire Payton Boggs are advising Thiess, while advising MACA is Salient Corporate, which counts MACA’s former finance director Ross Williams as among its team, and Thomson Greer.
NRW is being advised by Jarden and Longreach Capital.