Southern Cross Electrical Engineering to acquire MDE Group for $10.55m

SYDNEY, AUSTRALIA: Southern Cross Electrical Engineering Limited (SCEE Group) has executed a Share Purchase Agreement to acquire 100% of MDE Group Pty Ltd (“MDE”) for an enterprise value of up to $10.55m. Completion is expected to occur by the end of May 2024.

Founded in 2006 and based in Sydney, MDE Group provides communications, data, and electrical services for construction and fit-out projects across a range of sectors including commercial building developments, data centres, and healthcare and transport infrastructure.

MDE Group is well known to SCEE Group, having worked successfully with our Heyday business for several years on a variety of major projects, and is currently delivering the communications components of Heyday’s projects at the Western Sydney International Airport.

MDE Group is forecast to deliver FY24 revenue of $20m and a normalised EBIT of circa $3m. In FY25, EBIT is forecast to grow to at least $5m, supported by the current order book and near-term data centre opportunities, including projects recently secured by SCEE Group.

The vendors, Paul Liversidge and Greg Upton, will continue to manage the business on long-term contracts post-acquisition, with fixed terms lasting beyond the earn-out periods.

The acquisition of an east coast communications specialist aligns with SCEE Group’s strategy to broaden our geographic diversity through expanding our core competencies and adding adjacent and complementary capabilities.

Communication and data services form an integral part of the projects Heyday delivers across many of the sectors in which it operates.

The acquisition of MDE will allow Heyday to offer an integrated approach to this work, retaining additional profit within the group, and derive operational synergies on jointly performed projects, including the current and future works at Western Sydney International Airport.

The additional capability also positions Heyday to offer clients a combined electrical, data, and communications service and maintenance proposition upon completion of its construction projects.

The data centre sector is showing exponential growth with cloud computing and AI developments. Across the group, there is a pipeline of over $500m of data centre works on which we are tendering or positioning for over the next two years. Data centre fit-outs include a significant communications element, which the acquisition of MDE allows SCEE Group to self-perform.

While current forecasts assume MDE remains focused on the NSW market in the near-term, there is potential for further growth through expansion into other states. The opportunity to support other SCEE Group businesses in other states provides them a platform for this expansion, and projects in the ACT are currently being evaluated.

The acquisition will also provide MDE with the balance sheet strength to better support their own pipeline of organic growth opportunities.

Commenting on the above, SCEE Group Managing Director Graeme Dunn said, “I am delighted to announce the acquisition of MDE Group. We have worked closely with MDE for a number of years and have always been impressed by the high quality of their project delivery and their culture, which strongly aligns with ours.

They are a key partner for us at the Western Sydney International Airport, where we anticipate further growth in coming years, and we welcome Paul and Greg and their staff to our group.

I should further note that, although we have announced this acquisition today and significant organic growth opportunities in recent times, we are still actively exploring a range of further acquisition targets…”

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