WestStar (ASX: WSI) through wholly-owned subsidiary Watmar Engineering Pty Ltd, has entered into an agreement to purchase the business and assets of WATMAR.
WATMAR Overview
Established in 1989, WATMAR has developed a sound reputation in the Australian marine and defence sectors as a Fluid System Engineering Specialist. WATMAR is headquartered in Naval Base, Western Australia and operates from Perth, Darwin and Sydney, providing four main business lines: Fluid Systems and Equipment, Engineering Services, Engineering Contracting and Asset Management Services.
WATMAR’s strong and long-standing client base consists principally of government and large-scale enterprises in both the public and private sectors, including The Australian Government Department of Defence, BAE Systems, Serco Group, Babcock Australasia, Luerssen Australia and Woodside Energy.
WATMAR worked closely with and alongside WestStar subsidiary Alltype Engineering in the 1990’s undertaking extensive defence and naval maintenance and modification works with the two businesses having complimentary service offerings. This working relationship remains in place 20+ years later.
Acquisition Rationale
The acquisition is expected to provide WestStar with immediate diversification of its client base, services and geographic expansion both through WATMAR’s existing channels to market and through opportunities presented by the existing WestStar businesses.
Recurring revenue from contracts with government and large-scale customers underpins WATMAR’s baseload turnover, however, the business’ expertise in Fluid Systems and Equipment is expected to provide additional service offerings to WestStar’s existing client base. Significant synergy benefits are expected to be generated post- acquisition, and include the following:
- Vertical and horizontal integration: WATMAR is highly complementary to WestStar’s existing operations, providing meaningful opportunities for vertical and cross selling across a widened customer base, on both an industry segment and geographical footprint perspective.
- Recurring revenues: WATMAR’s capabilities add to and de-risk WestStar’s portfolio, in particular, facilitating growth in the high barrier to entry defence sector that is not impacted by commodity cycles or economic activity and has a significant multibillion dollar expenditure market opportunity in the next decade alone.
- Diversification and Geographical Expansion: The acquisition of WATMAR will provide WestStar with an expanded customer base without duplicating or impeding on existing operations. WATMAR also brings established operating sites and facilities located in both Darwin and Sydney, assisting with WestStar’s geographic expansion into these regions.
- Synergies: WestStar will bolster WATMAR’s solid foundations and long-term recurring customer base, with management and operational efficiency and access to capital for growth. The synergies and in particular expertise in the WestStar Group in common engineering services will improve quality, delivery and service
- Capability and Experience: As an engineering contractor, WATMAR can refine and improve process in common Engineering Service Capabilities currently being delivered by both WATMAR and WestStar. In particular common capabilities in Project Management, Structural Mechanical and Piping, Non Process Infrastructure, Electrical and Instrumentation installation and commissioning and all aspects of piping welding and fabrication.
- High Level Defence Clearances, Certifications and Accreditations: WATMAR provides WestStar immediate access to partnerships and customers through its high level certifications and Defence Clearances currently in place for 30+ years. With Specialist trained staff, OEM Engineering Partnerships and Support and its unique highly developed International Supply Chain.
- OEM Partnerships and Agreements: Strategic Partnerships with Local and International equipment manufacturers. WATMAR has OEM Agreements and exclusive agency as the Australian supplier for many of these partners in a diverse range of Fluid Systems for Water, Power Generation, Marine Defence, Industrial, Minerals, Mining and Oil / Gas sectors.
WestStar plans to integrate WATMAR into its existing operations and retain key management personnel to ensure a smooth transition for customers and employees and position the business for immediate growth and increased profitability.
WATMAR has a long-standing reputation in its key industry segments for delivering specialised services,” WestStar Group CEO and Managing Director Robert Spadanuda said.
“We are pleased to be able to service WATMAR’s clients and will look to provide WATMAR’s specialised services to our existing and prospective new clients. We are confident the additional support and expertise we can offer to the WATMAR management team, transferring under the WestStar Group, will provide a solid growth platform for this business, delivering value to all stakeholders.”
