Perenti mulls over Downer acquisition

Perenti Global has confirmed that it is “giving consideration” to a takeover bid for Downer EDI’s mining services division following media speculation about a potential deal.

Downer announced in December last year that it was reviewing the future of its mining business as the high capital costs outweighed its excellent workers and proven track record.

The division accounted for about 12 per cent of Downer’s profit in the 2019 financial year but used more than 50 per cent of its total capital expenditure.

Following media speculation about the Downer takeover deal in The Australian Financial Review (AFR), Perenti has confirmed it often considers different merger and acquisition opportunities, and that at this time the Downer mining division is a potential target for the company.

“The process is ongoing and Perenti would only put forward an offer to acquire the business if it were to align with its strategy and deliver value for the company’s shareholders,” Perenti stated.

“In particular, Perenti notes that the transaction value speculated in the article is significantly above the level Perenti may consider offering and Perenti would only pursue a transaction that was earnings per share (EPS) accretive.”

AFR stated that Downer was seeking offers of around $700 million for its mining services division.

In late January, The Australian suggested that the mining division also became a takeover target for the Emeco Group, but this was denied by Emeco.

The Downer mining business services more than 50 sites across Australia, Papua New Guinea and Southern Africa, including Newcrest Mining’s Cadia Valley mine in New South Wales and BHP’s Goonyella Riverside, Daunia, Peak Downs and Saraji mines in the Bowen Basin, Queensland.

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