Babylon Pump and Power (ASX: BPP) is pleased to announce that it has executed a business asset acquisition agreement to acquire the operational assets of Resource Water Group (RWG) for $3 million.
Settlement is scheduled to occur on 04 August 2022.
Established in 2011 and based in Canning Vale, Western Australia, RWG provides bore field test pumping equipment and related data collection services as well as a range of water management disciplines to the mining industry.
These services are critical to water users across the resources sector as they develop water management strategies in line with their environmental obligations and operational requirements.
As foreshadowed in the capital raising announcement to the ASX on 9 June 2022, BPP is expanding its mine water management activities.
The total consideration of $3 million has been structured as follows:
The balance of the cash consideration will be funded using proceeds from the recent placement and rights issue. Under the business acquisition agreement, Babylon will acquire the operational assets (independently valued at over $2 million), goodwill, contracts, and intellectual property of RWG.
RWG’s founder, Mr Frank Ashe, has entered a services contract and will become a member of the Group’s senior executive. Three other RWG employees will also commence employment with Babylon. Babylon estimates that the purchase price represents a multiple of three times the expected net EBITDA contribution from the RWG assets.
This is an exciting and well-priced acquisition for Babylon which will significantly expand our water management activities,” Babylon Managing Director, Michael Shelby, said.
“The acquisition broadens our offering to new and existing clients, brings in additional technology and business development capability whilst complementing our existing business.
“RWG’s test pumping services are considered an early-stage project engagement service and have consequently led to relationships with a range of well recognised global and Australian mining companies including BHP, Rio Tinto, FMG, Roy Hill and Newcrest Mining.
“We expect that these relationships will also facilitate rental opportunities for our specialist pump rental assets, supporting the Company’s renewed strategic focus on multi-disciplined water management equipment and services.”
Babylon will move into new, purpose-built premises around November this year and RWG will co-locate its assets and operations into the new facility.