Leading Australian drilling services company DDH1 Limited (ASX: DDH) and Swick Mining Services Limited (ASX: SWK) are pleased to announce that they have entered into a binding Scheme Implementation Agreement (SIA) under which DDH1 will acquire Swick to create a world-leading mineral driller, as announced by DDH1 and Swick on 12 October 2021.
Pursuant to the terms of the SIA, DDH1 has agreed to acquire all of the shares of Swick via a Scheme of Arrangement. Swick shareholders will receive 0.2970 new DDH1 shares for each Swick share held on the record date. Upon implementation of the Scheme, Swick shareholders will own approximately 19.7% of the combined business. This represents an implied equity value of $0.35 per Swick share and an enterprise value of $115 million.
DDH1’s acquisition of Swick will create an industry leader with a strong balance of surface and underground drilling exposures with a combined fleet of more than 170 rigs, generating pro-forma FY21 annual revenues of approximately $445 million and a combined pro-forma FY21 EBITDA of $104 million.
The directors of Swick have unanimously recommended that Swick shareholders vote in favour of the Scheme and intend to vote the Swick shares that they control in favour of the Scheme in the absence of a superior proposal and subject to an independent expert concluding (and continuing to conclude) that the Scheme is in the best interests of Swick shareholders.
Commenting on the acquisition, DDH1 chairperson Diane Smith-Gander said:
“The DDH1 Board is delighted that we have been able to formalise the in-principle agreement we announced to shareholders on 12 October 2021. This is a milestone moment for DDH1 and an exciting time for our shareholders as we execute on the disciplined growth strategy we outlined during our ASX listing process in March 2021. Partnering with the leading underground diamond driller in Australia is a highly complementary step for DDH1 and a natural evolution to our specialised surface drilling operations.”
Commenting further, DDH1 non-executive director and co-founder Murray Pollock said:
“Like our brands DDH1 Drilling, Ranger Drilling and Strike Drilling, the Swick name commands enormous respect in the Australian mineral drilling sector for the safe and high-quality service delivered to clients. Kent Swick and his team have built a great business that is aligned – culturally and strategically – with our Company’s vision and values. DDH1 is well placed to help Swick deliver on its full growth potential as they deploy engineering innovations and services that demonstrate a deep understanding of their customer requirements. The combination of DDH1 and Swick is a defining moment within the mineral drilling industry and I look forward to the opportunities created and to my continuing involvement and support of the DDH1 group of companies.”
DDH1 will be holding an investor and analyst conference call today at 8:30am AWST / 11.30am AEDST to discuss the proposed acquisition. The call will be hosted by DDH1’s managing director Sy Van Dyk and chief financial officer Ben MacKinnon as well as Swick’s managing director Kent Swick and chief financial officer Jitu Bhudia. Details of the briefing are as follows:
Analysts, Investors and Media – Conference details for analysts, investors and media includes Q&A participation. Pre-Registration Link: https://s1.c-conf.com/diamondpass/10017536-qps8v4.html
Live Audio Stream – A live audio stream of the conference call is available in ‘listen only’. The audio stream will also be uploaded to DDH1’s website shortly after the conclusion of the call and can be accessed any time. Live Audio Stream Link: http://www.openbriefing.com/OB/4461.aspx