Orica announces strategic acquisition of Axis Mining Technology


Orica has entered into a binding agreement to acquire 100% of the share capital in the entities that own Axis Mining Technology for AUS$260 million in cash (upfront consideration). In addition, a deferred earn-out payment up to a maximum AUS$90 million (the earn-out) is payable based on Axis’ cumulative EBITDA generated from 1 October 2022 to 31 December 2024, and contingent on certain key management remaining employed by Orica during the earn-out period. Any amount payable under the earn-out will be paid after the expiration of the earn-out period, being 31 December 2024. Completion of the acquisition is expected to occur by October, subject to satisfaction of conditions precedent.

Highlights

  • Orica has entered into a binding agreement to acquire Axis Mining Technology, a leader in the design, development and manufacture of specialised geospatial tools and instruments for the mining industry.
  • Represents a highly strategic acquisition and a valuable addition to Orica’s Digital Solutions platform, creating a leading full-service Orebody Intelligence business and positioning Orica to become the industry’s first integrated, end-to-end, mine to mill solutions provider.
  • Axis’ geospatial technology accelerates Orica’s capabilities to support new mineral discoveries required for decarbonisation – as new mineral discoveries are increasingly located at greater depths and demand more precise geophysics. Axis’ gold and copper exposure also accelerates Orica’s broader commodity mix objectives.
  • The combination of Orica and Axis is expected to deliver compelling growth opportunities for both businesses, through its combined global network and capabilities.
  • Acquisition purchase price comprises upfront cash consideration of AUS$260 million and a deferred earn-out payment up to a maximum of AUS$90 million, contingent on financial performance and other conditions being met.
  • Implies an acquisition multiple of 11.8 x FY22F EBITDA (excluding pro forma synergies) based on the AUS$260 million upfront cash consideration.
  • Acquisition (including both upfront consideration and earn-out), and associated costs to be funded through the proceeds of a fully underwritten AUS$650 million institutional share placement. Orica will also offer a non-underwritten share purchase plan capped at AUS$75 million to eligible shareholders in Australia and New Zealand.
  • Remaining proceeds of the Placement and SPP will be used to fund incremental trade working capital requirements arising as a result of global supply chain dislocations, and also provide balance sheet capacity.
  • The acquisition and placement are expected to be EPS accretive from the first full year of ownership, and the return on net assets (RONA) contribution from the acquisition is expected to be in line with Orica’s stated guidance of 10 – 12%.

Axis is a leader in the design, development and manufacture of specialised geo-spatial tools and instruments for the mining industry. Axis represents a highly strategic acquisition and a valuable addition to Orica’s Digital Solutions platform, positioning it to become the industry’s first integrated, end-to-end, mine to mill solutions provider. Axis’ existing management team will enter into new employment agreements with Orica and are committed to ensuring a successful integration of the business.

Orica Managing Director and CEO, Sanjeev Gandhi, said: “We are extremely pleased to welcome Axis into Orica. This strategic acquisition further strengthens our existing Digital Solutions vertical and expands our Orebody Intelligence portfolio upstream.

“Orica’s purpose is to sustainably mobilise the earth’s resources and achieving this starts with a better understanding of the orebody at the start of the mining value chain. I believe that Axis’ differentiated geospatial tools and instruments, combined with our existing suite of digital solutions will provide compelling orebody intelligence to customers and support the delivery of the industry’s first end-to-end solutions platform, from mine to mill.

“The integration of Axis’ technology and expertise will accelerate our ability to support our customer’s digital transformation efforts around the world, helping them to operate more efficiently, sustainably and safely.

“In addition to facilitating the acquisition, the equity raising will allow Orica to fund incremental trade working capital requirements arising as a result of global sup-ply chain dislocations, and also provide additional balance sheet capacity,” Gandhi added.

Equity raising overview

The acquisition (including both upfront consideration and earn-out), and associated costs will be funded through the proceeds of a fully underwritten AUS$650 mil-lion institutional share placement. Orica will also undertake a non-underwritten share purchase plan (SPP) to eligible shareholders in Australia and New Zealand (up to an aggregate cap of AUS$75 million) (together with the placement, the equity raising).

The balance of funds raised under the equity raising will be used to fund incremental trade working capital requirements in the medium-term arising as a result of global supply chain dislocations. Funding will also provide Orica with balance sheet capacity to respond to changes in the external operating environment, as current market conditions necessitate a more disciplined approach to capital management. The acquisition and placement are expected to be EPS accretive from the first full year of ownership, and the RONA contribution from the acquisition is expected to be in line with Orica’s stated guidance of 10 – 12%.

Read the article online at: https://www.globalminingreview.com/finance-business/04082022/orica-announces-strategic-acquisition-of-axis-mining-technology/





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