Australian Bradken receives $730-mn buyout offer from Pacific Equity and Bain Capital

Australian mining products maker Bradken Ltd today said that has received an A$872 million ($730.56 million) non-binding and indicative buyout offer from private equity firms Pacific Equity Partners Pty Limited and Bain Capital.

The consortium has offered to pay $5.10 per share on condition of completion of due diligence and a board recommendation, amongst others.

In a statement to the Australian Securities Exchange, Bradken said the consortium had made an initial $6.00 per share or A$1 billion offer in August, but did not proceed with a firm offer.

The board of Bradken said that it is reviewing the offer along with its advisors and noted that there is no guarantee of a transaction.

The board also noted that the offer has been made at a low point in the mining cycle during a time of significant share price volatility in the broader mining services sector.

Bradken is the leading supplier of consumable and capital products to the mining, freight rail, steel making, smelting, transport, cement, oil and gas, power generation, sugar and other primary industries.

The New South Wales-based company employs almost 4,600 people in 34 manufacturing facilities and more than 30 sales and service centres across Australia, New Zealand, US, Canada, the UK, Indonesia, Malaysia, South Africa, South America and China.

Bradken had recently offered to buy a foundry in Tamil Nadu, India for $27 million and expects to close the deal in January 2015.

The foundry is a 17,000m2 facility with a capacity of over 20KT/pa. It will provide low-cost manufacturing capacity to its key customer markets in Australasia and Africa as well as a large domestic market in India.

Bradken will initially develop the foundry as an Asian region low-cost source of high quality mill liners, coal and cement wear parts and large structural components.

Bradken has recently been struggling because of low demand from the mining industry. Its stock price has fallen by about 45 per cent this year, forcing it to shut higher-cost foundries, cut workforce by 10 per cent, and withdraw a takeover offer for Austin Engineering Ltd, where it already owns nearly a 22-per cent stake.