Hellaby Holdings’ foray into the oil and gas sector support sector doesn’t end its acquisition aspirations.
Managing director John Williamson says the purchase of an 85% in Contract Resources, announced today, has been financed by bank debt and will not limit future takeovers.
He’s told NBR ONLINE that Hellaby is also looking at one or two other companies and has examined 20 other New Zealand-based businesses before finally settling on Contract Resources.
Others were rejected, he says, because they didn’t come up to expectations.
“One key theme has been that vendor representations have not survived our due diligence processes,” Mr Williamson says.
But this doesn’t mean Hellaby lacks faith in the local business scene.
“There is no way we are stepping away from the New Zealand market.
Contract Resources, with most of its activities based overseas, will lift Hellaby’s international exposure; revenue will rise from around 5% to 20-25% after the deal is completed on March 31.
Mr Williamson says earning more from overseas has been a major priority of the company, which is made up of largely mature businesses in retailing, heavy equipment distribution and packaging.
Other attractions in the Contract Resources purchase are the quality of the management team and the company’s growth prospects as a niche provider to oil and gas refineries, petrochemical plants and related businesses. In particular, it is a leader in catalyst handling, Mr Williamson says.
Most of its clients are in Australia but the company is also pushing into the US and Middle East.
Contract Resources is expecting revenues of around $150 million in the next fiscal year (March 2013/14) compared with Hellaby’s at around $500 million.