SYDNEY, AUSTRALIA: Australian-Singaporean water and waste-water treatment company De.mem Ltd (ASX: DEM) has signed a binding agreement to acquire 100% in the shares of Stevco Seals & Pumps Victoria Pty Ltd.
Consideration will be $1.25 million in cash and $250,000 in DEM shares, plus an additional $180,000 in cash and $30,000 in shares for Stevco’s inventory.
Established in and operating since 2004, Stevco is a well-known supplier of pumps, small water treatment equipment and related operations & maintenance services to industrial and municipal clients in Victoria. Stevco has a reputation of supplying highest quality products and services.
Stevco’s long-term customer base includes leading industrial players from the food & beverage, agricultural and heavy industrial sectors, as well as a number of municipalities in Victoria.
The company generated approx. $2.3 million in annual revenues during the past 3 business years (on average) prior to the transaction. It generated approx. $330,000 in normalized EBITDA (adjusted for one-off items). Revenues are largely recurring and a significant percentage is generated from the rendering of operations & maintenance services. Stevco is based and operates out of their workshop in Epping/Melbourne, Victoria, which will continue to serve as the base for De.mem’s operations in Victoria.
De.mem Chief Executive Officer Andreas Kroell said: “The acquisition of Stevco Seals & Pumps Victoria Pty Ltd is another important milestone and completes our nationwide coverage of Australia through strategic locations in Brisbane, Perth, Launceston and now, Melbourne, as well as our nationwide service support capability.
Stevco brings a well-established client base in key target sectors such as the food & beverage segment to De.mem and opens up substantial opportunities for further cross-selling of our advanced product range, with our membranes and specialty chemicals in the focus.
De.mem has built a track record of three highly successful, bolt-on acquisitions since 2019. All have achieved substantial growth. We believe that we are in an excellent position to make this transaction another great success, and look forward to working with the Stevco team, to take their business jointly to the next level. With the enlarged group, our focus will now shift towards near-term, sustainable EBITDA break even.”
Stevco Director Steve Russell said: “We are delighted to conclude the transaction with De.mem. The combination of our offering and customer base with De.mem’s wider product range around their innovative membrane technologies and specialty chemicals opens up substantial growth potential for our business.
De.mem is a perfect partner for our company and the transaction provides us with the opportunity to take our business to the next level. We look forward to jointly expanding the combined business within Victoria and across Australia.”