Downer EDI (DOW) is a more logical suitor for NWH than UGL – not that one can give too much credence to such flights of fancy. Significant synergies could be obtained in WA if the interests of NWH and DOW were to be merged. NWH's business overlaps with DOW's in rail formation, road infrastructure services and contract mining.
In relation to Roy Hill, NWH's business there should draw to a close once the development work is completed. However, in FY2014 DOW secured a 4.5-year $500M early mining services contract at Roy Hill. The long-term plan is for Roy Hill to perform that work itself (probably acquiring assets from DOW as part of the handover process).
DOW's annual report states, “On 5 August 2014, the Board resolved to undertake an ongoing share buy-back program that will operate from 20 August 2014. The total number of shares to be purchased under the buy-back will depend on share price levels and capital requirements. The program is part of Downer’s ongoing capital management strategy and will be managed in conjunction with capital requirements for growth. Downer has a strong balance sheet and is in a good position to take advantage of growth opportunities, including mergers and acquisitions, but any prospect will be subject to robust risk assessment. Downer will focus on opportunities that are strategic, the right price and grow the Company’s capability.”
Happy daydreaming – it's a wonderful form of free entertainment. As an aside, I am a long-term investor in DOW, and as most HC readers know, I hold NWH and BYL in this sector. I sold out of UGL some months ago..
NWH Price at posting:
85.5¢ Sentiment: Hold Disclosure: Held
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