Coal mining services provider Mastermyne Group (ASX:MYE) is...

Coal mining services provider Mastermyne Group (ASX:MYE) is expanding its service offering by acquiring Diversified Mining Services (DMS) for $20 million in cash and shares.

The acquisition is expected to be EPS accretive in the 2015 financial year and on a full-year pro-forma basis.

DMS is an unlisted public maintenance, engineering and contract mining services company providing a range of services to a range of industries, primarily focussed on maintenance and mining services in Queensland and New South Wales.

Besides complimenting the company’s strong position in the underground coal sector, the acquisition will also provide diversification by leveraging on forecast growth in ongoing maintenance works across a range of industries.

Pro-forma financial year 2015 forecasts for DMS business of approximately $5.5 million EBIT takes into account cost savings as a result of the restructure of the business and combination with Mastermyne.

Acquisition

The acquisition will be carried out through a scheme implementation deed that has received the unanimous recommendation of the DMS board and has the support of DMS’ major shareholder Maui Capital which owns 40% of DMS’ shares.

Mastermyne is paying 15.6 million shares, representing 17%  valued at $9.7 million to shareholders of DMS and $10.3 million in cash from its debt facilities that will be applied to DMS debt and restructuring costs.

Diversified Mining Services

DMS operates throughout the Bowen Basin, Gladstone, Mackay and the Hunter Valley for a range of blue chip clients in the mining, downstream metalliferous processing, prime contracting and mining infrastructure industries.

In addition, DMS is a specialist in overwater scaffolding, and in April 2014 was awarded a five year, multi-million dollar contract for the provision of scaffolding services at the Dalrymple Bay Coal Terminal.

DMS also has a recurring revenue stream generated by shut-down maintenance works through major contractors and directly through Tier 1 mining operators.

Mastermyne is capitalised at $47.6 million and recorded revenue of $171.9 million and net profit of $3 million in the 2014 financial year ending 30 June 2014.