Indonesia-based oil and gas producer Medco Energi Internasional is acquiring 44.3 per cent of Australian mining contractor MacMahon Holdings, making it the largest shareholder, the company announced recently. The purchase is valued around $152 million.
Medco, through its unit Amman Mineral Contractors Pte. Ltd, will subscribe to 952 million new shares of MacMahon at A$0.203 ($0.16) per share. In turn, MacMahon will buy mining equipment at Medco’s Batu Hijau copper-gold mine in Indonesia.
MacMahon will also provide earth-moving and mining services for Amman Mineral Nusa Tenggara (AMNT), Medco’s subsidiary and operator of Batu Hijau mine.
“Transaction is not yet effective, subject to several conditions precedent that has to be met, among others, approval from the shareholders of Macmahon which is expected to be obtained in July 2017,” Medco management team said in a statement.
“If completed, this transaction will see Macmahon’s scale significantly increase and that brings with it a number of benefits which will assist us in the execution of new and existing projects,” Macmahon chief executive Michael Finnegan was quoted as saying.
The company aims to close the transaction by end of September 2017.
MacMahon had previously received a bid from CIMIC Group at A$0.145 per share, or well below Medco’s.
Medco reported $210.2 million in sales in the first three months this year, up 60 per cent year-on-year. Meanwhile, net profit surged to $43 million from $10.2 million earned in the same period last year.
Medco has been pushing AMNT to go public this year, company officials have told reporters. The process of IPO has begun but it cannot confirm the exact time it will be launched.