REG - Ashtead Tech Hldgs - Acquisition of Seatronics and J2

Ashtead Technology HoldingsAnnouncement

24/10/2024 07:00

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RNS Number : 3862J  Ashtead Technology Holdings plc  24 October 2024

24 October 2024

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

 

Ashtead Technology Holdings plc

 

("Ashtead Technology" or the "Group")

 

Acquisition of Seatronics and J2

 

Ashtead Technology Holdings plc (AIM: AT.), a leading subsea equipment rental
and solutions provider for the global offshore energy sector, is pleased to
announce that it has reached an agreement to acquire Seascan Limited and its
subsidiaries (otherwise known as Seatronics), along with its sister company,
J2 Subsea Limited (together "Seatronics and J2 "), an international subsea
electronics and ROV tooling rental and services business for total
consideration of £63m in cash (on a cash and debt free basis) (the
"Acquisition"). Seatronics and J2 are owned by Acteon Group Operations (UK)
Limited ("Acteon"), which is majority owned by One Equity Partners LLC and
Buckthorn Partners LLP. The Acquisition will be funded by a £70m increase in
the Group's revolving credit facility ("RCF").

 

Acquisition highlights

·      Enhances the Group's capabilities in the rental of survey &
robotics equipment, with a platform to drive growth internationally.

·      Increases the breadth and depth of the Group's rental fleet and
provides a highly skilled employee base with significant domain knowledge.

·      Deepens customer relationships and strengthens the Group's value
proposition and service offering across both the offshore oil & gas and
renewables sectors.

·      Mid-to-high single digit earnings enhancing in the first full
year of ownership; return on invested capital well ahead of Group weighted
average cost of capital in year 1.

·      Pro-forma leverage of ~1.8x as at 30 June 2024 and expected to
reduce to below 1.5x by the end of 2025.

·      Completion of the Acquisition is subject to customary closing
conditions including approval of the Competition and Markets Authority.

 

About Seatronics and J2

 

Seatronics and J2 have operations in Singapore, UAE, UK and US, and have been
part of the larger Acteon Group for over 10 years, providing subsea
electronics and tooling products and services to the global offshore energy
market.

 

Seatronics and J2's core offering supports the installation, inspection,
maintenance & repair, and decommissioning of subsea oil & gas and
renewable energy infrastructure which is highly complementary to Ashtead
Technology's existing equipment and services portfolio. The Acquisition
 represents a compelling opportunity to grow the Group's global Survey &
Robotics capabilities, expanding its international footprint, enhancing the
Group's value proposition, and deepening customer relationships. The
Acquisition will increase the breadth and depth of Ashtead Technology's rental
fleet, with an extensive pool of over 7,000 proprietary assets, and a highly
skilled employee base of over 100 people, with significant domain knowledge
and technical expertise. Whilst Seatronics and J2 have traditionally been
focused on oil & gas, their rental fleets are fungible across oil &
gas and renewables end markets.

 

Seatronics and J2 are global businesses with almost 55 per cent. of revenue
generated outside of Europe, supported by locations in Houston, Abu Dhabi, and
Singapore. The Acquisition is Ashtead Technology's ninth acquisition in the
last seven years.

 

Seatronics and J2 will form part of the Group's enlarged Survey & Robotics
service line. For the trailing 12 months to September 2024, Seatronics and J2
generated revenues of £51.5m, adjusted EBITDA of £12.1m and adjusted EBITA
of £9.0m. As at 31 December 2023, Seatronics and J2 reported aggregated gross
assets of £31.5m 1 .

 

In order to fund the Acquisition, the Group has increased its RCF by £70m up
to a total size of £170m with an additional £40m uncommitted accordion
facility.  The increased facility has been supported by the Group's existing
banking partners of ABN Amro, Citi, HSBC and Virgin Money with the addition of
RBS. Pro-forma leverage as at 30 June 2024 would be ~1.8x, within the Group's
stated guidance range and is expected to be below 1.5x by the end of 2025. The
Acquisition is expected to be mid-to-high single digit earnings enhancing in
the first full year of ownership with a return on capital well ahead of the
Group's weighted average cost of capital in year 1.

 

The Board is confident in the medium-term opportunities for Seatronics and J2
and plans to increase its focus on rental revenues including fleet investment
of c. £10m in the first year of ownership.  This enhanced focus and
investment is expected to drive a high teens percentage increase in EBITA 2 
during the investment period, and drive margins towards Group levels over the
medium term.

 

The completion of the Acquisition is subject to customary closing conditions
including: (i) the approval of the Competition and Markets Authority; and (ii)
certain business continuity conditions applicable in favour of Ashtead
Technology during the intervening period.

 

Allan Pirie, Chief Executive Officer of Ashtead Technology, commented:

 

"Seatronics and J2 are businesses we have known for a long time.  With our
most recent acquisitions focussing on expanding our mechanical services
capability, this latest acquisition strengthens our international footprint
and capability within our traditional Survey & Robotics business.

 

The transaction continues to reinforce our strategy of expanding our
internationally mobile and fungible fleet of equipment, and deepening customer
relationships across both our oil & gas and renewables markets.  We look
forward to welcoming new colleagues to the Ashtead Technology team and
increasing the wealth of in-house expertise as a larger Group".

 

Brice Bouffard, Chief Executive Officer of Acteon, added:

 

"Upon closing, this transaction will be the next important step in focusing
our service portfolio to achieve Acteon's long-term strategic goals.
Seatronics and J2 have been an integral part of our business for many years
and the teams have consistently worked very closely together over that time.
I'm very pleased to see both teams moving together to such a dynamic new home
at Ashtead Technology.

 

I am confident that both businesses will continue to grow and provide
exceptional value to their global customers under Ashtead Technology's
ownership.  I wish the teams at Seatronics and J2 success with Ashtead
Technology and I thank them for their dedication over the years and especially
during recent months.  Acteon is committed to optimising our portfolio to
better serve our customers and stakeholders as we support the dynamic offshore
energy market".

 

The Acquisition represents a substantial transaction for Ashtead Technology
for the purposes of AIM Rule 12. Joseph Connolly is a Director of Acteon and
was, until 18 December 2023, a Non-Executive Director of Ashtead Technology
and therefore is a related party for the purposes of the AIM Rules for
Companies. Accordingly, Ashtead Technology has complied with AIM Rule 13. The
Directors of Ashtead Technology consider, having consulted with its nominated
adviser, Numis Securities Limited, that the terms of the transaction are fair
and reasonable insofar as Ashtead Technology's shareholders are concerned.

 

An analyst briefing call will be held at 08:00am, please contact Vigo
Consulting at ashteadtechnology@vigoconsulting.com
(mailto:ashteadtechnology@vigoconsulting.com) for more information.

 

For further information, please contact:

 

 Ashtead Technology                           (Via Vigo Consulting)

 Allan Pirie, Chief Executive Officer

 Ingrid Stewart, Chief Financial Officer

 Vigo Consulting (Financial PR)               Tel: +44 (0)20 7390 0230

 Patrick d'Ancona                              ashteadtechnology@vigoconsulting.com

                                            (mailto:ashteadtechnology@vigoconsulting.com)
 Finlay Thomson

 Verity Snow

 Numis Securities Limited (Nomad and Broker)  Tel: +44 (0)20 7260 1000

 Julian Cater

 George Price

 Kevin Cruickshank (QE)

The person responsible for arranging the release of this announcement on
behalf of Ashtead Technology is Ingrid Stewart, CFO / Director.

 

Important notices:

 

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 as it forms part of domestic law of the United Kingdom
by virtue of the European Union (Withdrawal) Act 2018, as amended. Upon the
publication of this announcement, this inside information is now considered to
be in the public domain.

 

This announcement contains certain forward-looking statements relating to the
business, strategy, financial performance and results of Ashtead Technology
and/or the Group and/or the industry in which they operate. Actual results,
levels of activity, performance, achievements and events are most likely to
vary materially from those implied by the forward-looking statements. The
forward-looking statements concern future circumstances and results and other
statements that are not historical facts, sometimes identified by the words
'believes',' expects', 'predicts', 'intends', 'projects', 'plans',
'estimates', 'aims', 'foresees', 'anticipates', 'targets', 'goals', 'due',
'could', 'may', 'should', 'potential', 'likely' and similar expressions,
although these words are not the exclusive means of doing so. These
forward-looking statements include, without limitation, statements regarding
the Group's future financial position, income growth, impairment charges,
business strategy, projected levels of growth in the relevant markets,
projected costs, estimates of capital expenditures, and plans and objectives
for future operations. Forward-looking statements contained in this
announcement regarding past trends or activities should not be taken as a
representation that such trends or activities will continue in the future.
Nothing in this announcement should be regarded as a profit forecast.

 

The forward-looking statements, including assumptions, opinions and views of
Ashtead Technology or cited from third party sources, contained in this
announcement are solely opinions and forecasts which are uncertain and subject
to risks. Although Ashtead Technology believes that the expectations reflected
in these forward-looking statements are reasonable, it can give no assurance
that these expectations will prove to be correct. Actual results may differ
materially from those expressed or implied by these forward-looking
statements. A number of factors could cause actual events to differ
significantly from those expressed or implied by such forward looking
statements.

 

Most of these factors are difficult to predict accurately and are generally
beyond the control of Ashtead Technology and the Group. Any forward-looking
statements made by, or on behalf of, Ashtead Technology and/or the Group speak
only as of the date they are made. Save as required by law, Ashtead Technology
will not publicly release the results of any revisions to any forward-looking
statements in this announcement that may occur due to any change in the
directors' expectations or to reflect events or circumstances after the date
of this announcement.

 

Notes to editors:

 

About Ashtead Technology:

 

Ashtead Technology is a leading subsea equipment rental and solutions provider
for the global offshore energy sector.  Ashtead Technology's specialist
equipment, advanced-technologies and support services enable its customers to
understand the subsea environment and manage offshore energy production
infrastructure with over 85% of its equipment fungible across both markets.

 

Ashtead Technology's service offering is applicable across the lifecycle of
offshore wind farms and offshore oil and gas infrastructure.

 

In the fast-growing offshore wind sector, Ashtead Technology's specialist
equipment and services are essential through the project development,
construction and installation phase. Once wind farms are operational, Ashtead
Technology supports customers with inspection, maintenance and repair ("IMR")
equipment and services.  In the more mature oil and gas sector, Ashtead
Technology's focus is predominantly on IMR and decommissioning.

 

Headquartered in the UK, Ashtead Technology operates globally, servicing
customers from its fourteen facilities located in key offshore energy hubs.

 

To learn more, please visit www.ashtead-technology.com
(http://www.ashtead-technology.com)

 

About Acteon:

 

Acteon Group is a valued global partner for installing, maintaining and
removing marine infrastructure. Acteon supports marine projects for the
offshore renewable energy, nearshore construction and oil and gas industries
by delivering services with demonstrable commercial and environmental benefits
which are enabling the energy transition. The company provides specialist
services and innovative products to major industry contractors and operators,
focusing on engineering the most efficient solution. Our reach is both global
and local, delivering successful projects in every marine environment
worldwide.

 

To learn more, please visit www.acteon.com.

 

 

 1  Excludes non-continuing intercompany balances

 2  On the Seatronics and J2 trailing twelve months to September 2024

 

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