DRA Global and KAEFER Integrated Services have executed an agreement for the sale and purchase of the business of G&S Engineering Services Pty Ltd and G&S Support Services Pty Ltd (collectively G&S), comprising selected contracts, assets and liabilities for A$8 million ($5.6 million).
The sale is subject to conditions precedent standard for a transaction of this nature and is currently expected to complete before the end of the September quarter of 2022.
G&S, based in Mackay, Queensland, has a 25-year track record of delivering services to the Australian resources sector, with a focus on maintenance and shutdown services and structural mechanical piping (SMP) construction services.
KAEFER Integrated Services is a provider of technical industrial services specialising in insulation, access, surface protection, passive fire protection, as well as mechanical services.
DRA Interim Chief Executive Officer, James Smith, said: “DRA has been undertaking a strategic review of its business, to ensure that we re-focus on our core strengths of engineering, project delivery and operations management. G&S, with its focus on operational maintenance, SMP construction and shutdown services, is not part of this core focus.
“We believe the G&S business will be best served under the ownership of KAEFER, where it can benefit from having an owner that is strategically aligned to providing the required investment and management focus.”
The sale comprises certain key contracts, assets and liabilities of G&S. Importantly, the new owner, KAEFER, is committed to building on G&S’ work program and connection with clients and suppliers and maintaining a strong workforce, DRA says.
DRA previously announced the cessation of its APAC construction business, with G&S currently seen as loss-making, as a result of some poorly performing construction projects. As a result, it is no longer considered a core part of DRA’s activities.
For the financial year ended December 31, 2021, G&S contributed approximately 20.1% of group revenue, EBITDA and profit contributions were negative, and accounted for approximately 10% of Group assets. Those proportions have since decreased.
The re-focus of DRA’s APAC business on engineering, project delivery and operations management requires a restructure to optimise these operations, the company says. Further, the group is finalising the outcomes of its previously announced operating model review which is also expected to optimise the group’s corporate overhead structure.