Boart bought again

Staff reporter

New York-based private equity firm American Industrial Partners is expected to accelerate Boart Longyear’s mining-technology growth strategy and ensure the company is a leading player in ongoing consolidation of the global mineral drilling industry after the dust settles on its US$371 million privatisation bid.

The world’s largest mineral drilling contractor, but one of its worst-performed public companies over the past 15 years, Boart Longyear is a circa-US$1 billion-a-year services and products company that has been in operation for more than 130 years.

Australian Securities Exchange-listed since 2007, Utah, USA, headquartered Boart reported a 2.1% year-on-year increase in revenue for the first nine months of 2023 to US$809.7 million. EBITDA rose 39.1% yoy to $96.8 million for the period.

Drilling services, with about 620 drill rigs and 4500 people, contributed $567.5m of revenue.

Contract mining and drilling are historically capital-intensive, low-margin businesses that exhibit generally low rates of return on capital over the industry’s boom and bust cycles. But that hasn’t stopped big premiums being paid for companies, via public and private market channels, over the past 25 years.

Sub-surface sensing technology, and data modelling and analytical software, drill-rig automation and electrification, are seen as potentially transformative for contract-service business models and returns. Boart Longyear last year separated technology arm, Veracio, which is a tiny part of the company today but one seen to have much growth upside.

It recently made its first acquisition, a US$29.3 million deal to buy Sweden’s Minalyze.

Boart Longyear was one of the largest ASX initial public offerings ever when it raised A$2.35 billion in 2007. Subsequent debt blowouts and sub-par performance saw it reconsolidate its share base twice after some significant, dilutionary public equity raisings. About 2500 Australian shareholders reportedly own less than 1% of the company.

Its five main shareholders, Centerbridge Capital, Ascribe, First Pacific, Corre and Nut Tree, which collectively own about 99% of Boart, have reportedly already backed the American Industrial Partners (AIP) offer.

AIP has been active in the mining services and tech space, acquiring grinding media leader Molycop in 2017 in a US$1.23 billion deal.

It bought Australia’s CR Mining in mid-2018 from Quadrant Private Equity and sold the tech firm to Epiroc just over four years later.

AIP funds are said to manage more than $16 billion.

“We believe this transaction provides the company’s shareholders with the opportunity to realise an attractive cash amount for their shares at a significant premium to the recent trading price,” Boart CEO Jeff Olsen said this week.

The acquisition is expected to be concluded in the first quarter of 2024.


Leave a Reply

Not registered? Register Now

Powered By MemberPress WooCommerce Plus Integration