WestStar Industrial is set to acquire Tier 2 steel fabrication provider Alltype Engineering in a deal worth around $8.4 million.
The acquisition is “compelling” due to the scale and diversification it facilitates across a widened customer base, while delivering improved earnings, according to WestStar.
WestStar will increase its exposure to the oil and gas, water and power generation sectors.
Privately-owned Alltype has 35 years of earnings history which provides a robust revenue baseline, WestStar added.
Alltype delivered revenues of $29.8 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of $2 million during the 2019 financial year.
This acquisition is also expected to deliver $1.6 million of cash on top of $3.8 million of property, plant and equipment assets to WestStar.
“This acquisition broadens WestStar’s horizons and will significantly accelerate it towards increased revenues and earnings,” WestStar Group chief executive Robert Spadanuda said.
“With the addition of Alltype, continued growth in SIMPEC and continued execution of our growth strategy, we look forward to continuing to build a strong, diversified, engineering company.”
Alltype, an employer of around 120, boasts a steel fabrication capability from a 7000 square metres workshop, industrial maintenance services and a national delivery capability.
The company’s management will be joining WestStar upon completion of the acquisition.