SYDNEY: Southern Cross Electrical Engineering Limited (SCEE) has executed a Share Purchase Agreement to acquire 100% of Trivantage Holdings Pty Ltd from the current shareholders for an enterprise value of up to $53.5 million on a debt free basis.
Completion is expected to occur in mid-December 2020. With over 50 years of operational experience, Trivantage is a leading provider of specialised electrical services across a range of sectors.
Trivantage is characterised by a large degree of recurring service and maintenance work with a relatively low risk contracting profile. Headquartered in Melbourne, Trivantage has approximately 400 employees Australia-wide with offices in Victoria, Western Australia, Queensland, New South Wales, South Australia and Tasmania.
Trivantage has a proven track record servicing leading Australian corporations and government bodies across a variety of markets including commercial, supermarkets, public infrastructure, defence, resources, custodial, telecommunications & data centres, health & aged care, as well as energy and utilities.
Of particular note, Trivantage has a strong and strategic focus on recurring service and maintenance work with around 70% of Trivantage’s revenue derived from its existing relationships, service and maintenance contracts or as an approved contractor.
In FY20 Trivantage had an audited statutory revenue of $116m and profit before tax of $8.2m. Trivantage is budgeting to deliver FY21 revenue of circa $130m and a normalised EBIT of $10.8m. The high degree of recurring service and maintenance and current order book of over $60m will support strong earnings growth into FY22.
Cash payments to the vendors of Trivantage will be funded through SCEE’s existing cash reserves and operating cash flows post transaction.
The combined group will have a geographically diversified portfolio of projects across Australia, with approximately 45% of FY21 proforma budgeted revenues generated from NSW & ACT, 30% from WA, 15% from Queensland & NT and 10% from Victoria.
Revenue will also continue to be widely spread across SCEE’s three core sectors, with approximately 45% of FY21 proforma budgeted revenue from commercial, 30% from resources and 25% from infrastructure. The combined pro-forma order book at 30 June 2020 would have been just over $500m.
The acquisition of Trivantage is expected to be immediately EPS accretive with strong double digit pro-forma FY21F EPS accretion4 (based on Trivantage FY21F EBIT of $10.8m and FY21F broker consensus estimates for SCEE5).
Commenting on the transaction, SCEE’s CEO Graeme Dunn said “I am delighted to announce this acquisition. Trivantage presents for SCEE a transformational change in the breadth and depth of the group’s recurring, services and maintenance offerings. The acquisition will give us many cross-selling opportunities and synergies across our respective client bases and, in particular, through Trivantage’s switchboard manufacturing capability. There is a great cultural fit between the two organisations and I am looking forward immensely to working with the Trivantage team to take advantage of the opportunities in our markets”.
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