EAST YORKSHIRE, England—Fenner P.L.C. has taken the first steps toward significantly expanding its conveyor belt presence in Australia's mining sector.
The company's wholly owned subsidiary, Fenner Dun- lop Conveyor Services Pty. Ltd., entered into a joint venture with Belle Banne (Victoria) Ltd., Leading Edge Conveyor Solutions Pty. Ltd. and associated interests in early November that will lead to the acquisition of the two companies within the next six years.
Fenner Dunlop is buying the businesses from Belle Banne (Victoria) Hybrid Holding Trust and Leading Edge Conveyor Solutions Trust, who hold their assets as part of family trusts.
Belle Banne, based in Victoria, Australia, and Leading Edge of Queensland, Australia, are providers of conveyor belts and maintenance services. They will operate together as BBV.
The transaction will cost Fenner Dunlop up to $62.8 million, with the company paying an initial sum of $21.5 million for a stake in BBV that slightly exceeds 50 percent. That will be followed by another payment of $21.5 million within the six-year span for the remaining assets, an official said.
Additional payments also will be made to buy the minority interests in the business.
The acquired operations are two great companies with experienced and capable people on board, according to Mark Abrahams, CEO of Fenner P.L.C. The additions “build on one of Fenner's core areas of expertise in the mining services sector. It also gives Fenner a broader market reach, including the Victorian brown coal and energy industry.”
He said the purchase further reinforces Fenner Dunlop's “position as the leading provider of conveyor products and value-added services in Australia's buoyant mining sector.”
The acquisition will give the company expanded conveyor belt engineering, belting related products and other services for the mining and industrial markets throughout the country.
Fenner Dunlop expects to complete the joint venture in the latter part of 2010. BBV's present directors and part owners will continue to be fully engaged in the business and along with executives from Fenner Dunlop will be directors of the management company being established to oversee BBV, Fenner Dunlop said.
That setup will remain in place until the company acquires the remaining interests, the company said.
Fenner P.L.C. reported solid growth in its preliminary results for the year ended Aug. 31. Operating profits rose 38 percent to about $100 million on an 11-percent rise in sales to $889.8 million.
The company said its Conveyor Belting Division for the most part was unaffected by the economic downturn and has continued to grow and expand.
BBV had profits before taxes of $6.5 million for the year ended June 30.