Mining services company Macmahon Holdings (ASX:MAH) has inked a deal to acquire 100 per cent of underground contractor GBF Group.
The purchase price will comprise an upfront component reflecting an enterprise value of about $48 million, and two further earn-out payments which are subject to GBF achieving agreed performance hurdles in the next two financial years.
The upfront component implies a FY20 enterprise value to earnings EV /EBITDA of 2.4 times, and equates to a small premium to GBF’s net tangible asset value.
The purchase price will be funded by cash and the assumption of GBF’s finance lease debt.
Macmahon says GBF’s capability and track record, combined with its financial strength and client reach, would give it a strong platform to compete for upcoming underground mining opportunities.
Shares in Macmahon (ASX:MAH) are trading 2.56 per cent lower at $0.19