Acquisition of Bluestar Tools
Sondex PLC
18 July 2006
Sondex plc
("Sondex" or the "Company")
Acquisition of Bluestar Tools.
Sondex plc, a leading international technology supplier to the oil and gas
industry, announces the acquisition of Bluestar Tools ("Bluestar"), a
Canadian-based business designing, manufacturing and supplying instrumentation
and tools for drilling operations in oil and gas wells. The maximum
consideration, including sales related earn-out, is CA$22.75 million (£11.0
million)*.
Rationale for the Acquisition
• Complementary product range for Sondex Drilling Division
• Growing, profitable and cash generative
• New Technology with significant growth potential both in North America
and through the Sondex international sales network
Bluestar Financial Highlights
• Revenues in the six months ended 30 June 2006 were CA$4.3 million
• The value of the gross assets acquired is CA$1.95million
• Pro-forma profits attributable to the acquired assets in the 6 months
prior to acquisition was circa CA$2 million
About Bluestar
Bluestar, based in Calgary Canada, is a fast growing supplier of specialist
technology and equipment used in drilling oil & gas wells. This equipment is
used to reduce drilling time and improve productivity. Bluestar supplies a
range of Measurement and Logging While Drilling tools which are complementary to
Geolink, a company acquired by Sondex in June 2004. Together Geolink and
Bluestar will form the expanded Sondex Drilling division. Bluestar's
instruments include tools to assist, when desired, in keeping wells vertical and
straight during drilling. Additionally, Bluestar's instruments include a
replaceable measurement tool which can provide cost savings in the directional
drilling process.
Bluestar has a significant presence in Canada, which accounts for 80 per cent of
its sales, and is also showing rapid growth in the USA. Bluestar's sales are
expected to be increased globally with the help of the Sondex international
distribution network. This acquisition will allow Sondex to combine Geolink and
Bluestar's products providing an enhanced well orientation solution enabling
directional drilling contractors to offer a broader service. Prior to the
acquisition by Sondex, Bluestar was owner managed; the management team will
remain with the business and a programme of integration with Sondex is planned.
The Consideration
The maximum consideration of CA$22.75 million (£11.0 million) is settled as
follows:
1 At completion a payment in cash of CA$5.5 million (£2.7
million) was made.
2 This will be followed by the issue of shares in Sondex plc
to the value of CA$7.4 million (£3.6 million) which will be issued to the
vendors between 12 months and 24 months after completion if certain technical
and revenue milestones are reached (subject to a maximum number of 2.65 million
shares); half are to be issued at the share price and exchange rate on
completion and half at the prevailing market price and exchange rate at the date
of vesting.
3 Earn-out payments up to a maximum of CA $9.99 million
(£4.8 million) paid 6 monthly in cash over a maximum of three years as a royalty
from sales of specified products.
Funding for the maximum consideration and projected working capital requirements
has been arranged through an extension to the existing bank facilities with the
Bank of Scotland.
* using a rate of £1:CA$2.068
Martin Perry, Chief Executive of Sondex, said:
"This acquisition is an exciting opportunity for Sondex and is in line with our
stated strategy of investing for growth both organically and through targeted
acquisitions.
Bluestar offers our Drilling Division a complementary range of products which
are, through their innovative nature and strong market demand, expected to build
on the platform we have developed and deliver further growth for the Company."
18 July 2006
For further information, please contact:
Sondex Tel: 01252 862 200
Martin Perry (Chief Executive)
Chris Wilks (Finance Director)
College Hill Tel: 020 7457 2020
Nick Elwes / Paddy Blewer
www.sondex.com
For further information about Bluestar please see www.bluestartools.com
This information is provided by RNS
The company news service from the London Stock Exchange
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