Verbrec Limited (ASX:VBC) a leading mid-tier engineering service provider, is pleased to announce it has signed a binding agreement to acquire 100% of the equity in Energy Infrastructure Management Pty Ltd (“EIM”) for $10,056,000.

The purchase price includes approximately $7,455,000 of working capital of which the vast majority is cash. The final purchase price is subject to the customary up or down adjustment on the closing working capital position. In addition, Arrow Energy has agreed to extend an existing pipeline operations and maintenance contract for a further 3 years as part of this transaction.

The purchase price is to be paid in cash on completion which will be funded from existing cash reserves noting that the vast majority of working capital being acquired is available cash.

The transaction is expected to close on 31 December 2020.

On signing the agreement, Linton Burns, Verbrec’s Managing Director commented: “This is a compelling and transformational acquisition for Verbrec and demonstrates delivery of the first stages of our refocused growth strategy. EIM is a leader in the Australian engineering sector with a number of large tier-1 customers. It adds scale and capability to our existing Pipelines business unit and is expected to integrate into this business unit seamlessly.”

“Not only is this acquisition a good bolt on to an existing business unit, it also grows our recurring revenue streams as a significant portion of EIM’s revenues come from long dated contracts. This adds to our sustainability and diversifies our revenue base.”

“We are excited to welcome the highly experienced team at EIM to Verbrec.”