Northbridge expands drilling tools operation with £2m Gulf acquisition
STOKE-ON-TRENT-based industrial services and rental group, Northbridge, has strengthened its presence in the Gulf with a near £2m acquisition of a drilling tools supplier.
OMM BVI, based in Abu Dhabi, was founded in 1989 and is a rental provider of drilling tools for the oil and gas industry. Its customer base stretches across the Middle East, North Africa and the Commonwealth of Independent States (CIS).
The deal is split between an initial consideration of £1.6m in cash and £0.3m in 66,829 Northbridge ordinary shares, in addition to a deferred payment element of a maximum of £3m and a performance-related incentive.
The new ordinary shares are subject to a 38 month lock-in and orderly market agreement.
The assets have been acquired by Northbridge (Middle East) FZE, a wholly owned subsidiary of Northbridge, and will trade utilising the group’s existing oil tools identity as ‘Tasman OMM Ltd’.
In addition to the initial consideration, Northbridge expects to pay a deferred consideration in March 2017. This will comprise a minimum payment of £1.6m plus an additional maximum of £1.4m, which will be subject to the performance of the business during the 12 months ending December 31, 2016. The maximum deferred consideration will become payable if net profit before taxation from Tasman OMM Ltd equals or exceeds £2.1m during that year.
Proforma unaudited accounts for the eight months August 31, 2013 show the business to have net assets of £4.1m, with annual revenue of £2.9m. The business is cash generative at both operating and PBT levels.
Northbridge said the acquisition marked the first utilisation of new debt facilities agreed with KBC Bank NV which are available for use by Northbridge on a global basis. Lloyds remain Northbridge’s main banking group and are fully supportive of the KBC facilities.
Eric Hook, chief executive of Northbridge, said: “We are delighted to be announcing the acquisition of this business which is an excellent strategic fit for the Group. It complements Tasman Oil Tools Pty Ltd, our strongly performing business in Australia, and expands its presence into the Middle Eastern market. It also adds to our already established successful business in the region where it will share our existing location and resources.”
