North American Construction Group has entered into a definitive agreement to acquire Australia-based DGI Trading Pty Ltd for an estimated purchase price of $23.5 million.
DGI, based in Kempsey, New South Wales, supplies production-critical components to the mining industry through business relationships and a complex logistical network, NACG explained. With partners in over 10 key countries, DGI maintains a network of suppliers and partner facilities which enable the connectivity to be both agile and economical, it added.
The acquisition is another strategic step in the company’s efforts to both vertically integrate its capital maintenance program as well as to diversify its service offerings, NACG said.
“The aggregate estimated purchase price represents an EBITDA multiple of three times on a next twelve-month basis based on our belief that current worldwide demand for mining components has recovered to, and will remain stable at or potentially exceed, pre-COVID 19 levels for the next 12 months,” NACG said.
The transaction is expected to close on July 1, 2021, and will be funded through existing debt facilities.
Joe Lambert, President & Chief Executive Officer, said: “NACG has worked with David and his team at DGI for many years and have great respect for their skills and the integrity with which they conduct business. We welcome the DGI team into our NACG family and are very excited to work together to grow and expand the services provided both externally and internally.”
David Griffin, Managing Director of DGI, said: “This is a major opportunity for us to work together to expand on what both businesses do best, providing competitive solutions to the global mining market. We look forward to entering the next chapter of our growth aligned with NACG and welcoming their team into our organisation.”
Key benefits of the transaction for NACG include:
- Low risk accretive purchase of a well-known and well-run key supplier;
- Increases vertical integration of component supply process (75% of capital spending); and
- Provides exposure to new jurisdictions through DGI’s network and experience.
DGI is expected to operate as a wholly owned subsidiary of the company and will retain its brand identity and personnel, NACG said.