ShawCor to acquire Desert NDT

SHAWCOR LTD. (ShawCor) has entered into a definitive purchase agreement to acquire all of the outstanding shares of Desert NDT LLC (Desert) for a total consideration of approximately US$ 260 million.

Desert is a Houston based provider of non-destructive testing (NDT) services for new oil and gas gathering pipelines and infrastructure integrity management services. Desert operates through 18 branches located in major oil and gas basins and is trailing 12 month EBITDA is in excess of US$ 33 million with operating income of approximately US$ 22 million.

The transaction is subject to US regulatory approval and is expected to close in the third quarter of 2014. The acquisition will be funded with cash and through available revolving credit facilities. Post-closing, ShawCor may consider raising equity to repay a portion of its outstanding revolving debt. The transaction is expected to be accretive to ShawCor's earnings per share within the first 12 months.

Steve Orr, President and Chief Executive Officer of ShawCor stated that: "We are very pleased to welcome Desert to the ShawCor family. Desert's NDT offering is expected to increase ShawCor's exposure to the growing unconventional oil and gas production in the US, and to complement the business of Shaw Pipeline Services, ShawCor's NDT business unit. The acquisition of Desert will also be a vehicle to advance our integrity management strategy of providing management and data centric solutions for our customer's production, processing and pipeline assets. Desert's integrity management business complements our recent investments in Zedi and Vintri and is anticipated to provide ShawCor the foundation to generate recurring revenue from our customers' operating expenditure budgets".

ShawCor Ltd. is a global energy services company specialising in products and services for the pipeline and pipe services and the petrochemical and industrial segments of the oil and gas industry. The company operates through eight divisions with over 75 manufacturing and service facilities located around the world. ShawCor will acquire Desert NDT from an investment group including Sterling Partners and Desert's founders. Sterling Partners is a growth-oriented private equity firm with offices in Chicago, Baltimore and Miami.

Adapted from press release by Hannah Priestley-Eaton

Read the article online at: https://www.worldpipelines.com/business-news/09052014/shawcor_to_acquire_desert_ndt/