Leading national mining and civil contractor NRW Holdings (ASX: NWH) has executed a binding agreement to acquire 100% of Fredon Industries Pty Ltd for an enterprise value of up to $200 million, on a debt free cash free basis.
Established in 1968 and with a head office in Sydney, Fredon is a leading national provider of multi-service Electrical, Mechanical (HVAC), Infrastructure, Technology and Maintenance services with a long track record of strong revenue growth and cashflow generation, supported by a capital-light operating model.
NRW managing director Jules Pemberton and chief financial officer Peter Bryant will host an investor conference call to discuss the Fredon acquisition. The call will be held today at 12pm AWST. Register for the call here.
Business Overview and Strategic Rationale
- Fredon, established in 1968, is a leading national provider of Electrical, Mechanical (HVAC), Infrastructure, Technology and Maintenance services (EMIT).
- Core capabilities with a proven delivery platform with scale to access opportunities driven by energy transition, electrification, automation and digital innovation.
- Fredon has a diversified portfolio of projects across a Tier-1 client base.
- Fredon’s executive management will remain with the business, as will its workforce of ~2,500.
- Acquisition delivers a 4th pillar “EMIT” – aligns with NRW’s strategy to grow through expanding the service offering, deliver new capabilities and enter new addressable markets.
- Fredon has limited exposure to the resources sector – NRW’s strength and reputation in this sector Australia-wide will provide the group with significant future growth opportunities.
Key Financial Overview
- Acquisition will be funded from NRW’s existing corporate debt facilities, with the consideration to be paid in three tranches:
- Initial Cash – $122M in cash on completion.
- Earn Out – up to $60M in cash payable after CY25 results, subject to performance hurdles.
- Deferred Cash – up to $18M in cash, deferred 2 years from completion.
- Fredon achieved FY25 revenue of $840M and normalised EBIT of $38.6M1.
- Implied acquisition multiple is 5.2x EV/EBIT, assuming maximum Earn Out Consideration is paid.
- Delivering a further logical step change and immediate EPS accretion for NRW.
- Fredon has clear visibility on FY26F earnings and is expected to generate revenue of ~$840M, EBIT of ~$40M2.
- Funding structure will result in a short-term increase in gearing, returning to target (below 30%) in the medium term – through expected strong group cashflows.
Commenting on the Fredon acquisition, NRW managing director Jules Pemberton said:
“Fredon represents a strategically and financially compelling acquisition for NRW, with the potential to drive further growth across the business and create long-term shareholder value. Fredon holds strong market positions across its divisions, supported by longstanding Tier 1 client relationships and an experienced management team providing a full spectrum of solutions throughout the entire electrical and HVAC infrastructure lifecycle.
“Fredon is highly complementary to NRW’s existing operations and, with its well-recognised brand and strong long-term client relationships, provides an attractive platform to expand into adjacent disciplines.
“We see significant opportunity for the combined group to leverage these additional capabilities while ensuring Fredon maintains its position as a leading provider of engineering, installation, and maintenance solutions across its Electrical, Mechanical, Infrastructure, and Technology divisions. There is also a strong cultural alignment between our businesses.
“With a combined workforce of around 11,500 people, broader geographic reach, and enhanced capabilities across Australia, New Zealand, Canada, and the United States, we are well positioned to deliver an expanded range of services and project solutions to clients in the infrastructure, resources, and commercial sectors.
“The sheer scale of the opportunities for Fredon and the broader NRW group through the energy transition over the foreseeable future is significant. One example is the pipeline of data centres that we expect to be constructed in the coming years, where Fredon is well positioned through its ability to provide both electrical and HVAC services. This together with the pipeline across the industrial and resources sectors supports a very positive outlook for the future of the combined group.”
