ALS Ltd. (ALQ), the largest provider of commercial testing services in Australia, agreed to pay SCF Partners $533 million to buy Reservoir Group, a Scottish company specializing in analysis of oil and gas wells.
ALS, formerly known as Campbell Brothers, will sell about A$246 million ($224 million) in new shares to help fund the acquisition, the Brisbane-based company said today in a statement. Aberdeen-based Reservoir specializes in analyzing core samples and geological data from drill holes, ALS said.
The acquisition will add Reservoir’s $55 million in earnings before interest, tax, depreciation and amortization during the year ended 31 March to ALS’s earnings as it expands into oil and gas services. The remainder of the purchase will be funded by debt and A$8 million in cash.
“The acquisition will considerably broaden our capabilities in upstream oil and gas and will strongly complement our existing laboratory services,” Greg Kilmister, ALS’s managing director, said in a statement. “ALS will now be able to offer clients a more integrated end-to-end service, which will enhance our market position.”
The purchase of Reservoir and Earth Data will contribute A$4 million to A$5 million to ALS’s projected underlying profit of A$95 million to A$105 million in the half year ending Sept. 30, the company said.
The new shares will be offered at A$7.80 each to existing holders, the company said, a discount of 17 percent to the close of A$9.41 on July 12. ALS is the world’s fourth-largest testing company by sales, after SGS SA (SGSN), Bureau Veritas SA (BVI), and Intertek Group Plc. (ITRK)
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