SYDNEY, AUSTRALIA: Saunders International Limited (ASX: SND) has agreed to acquire Piping Solutions, which specialises in the fabrication, installation and maintenance of steel pipelines, structures, pressure vessels, and refuelling systems for the Defence, Aviation, Energy and Infrastructure industries.

Completion of the acquisition is subject to customary conditions, including change of control consents, according to a statement.

Transaction highlights continued execution of Saunders’ strategic expansion into the defence sector and addition of complementary capabilities across complex steel piping fabrication, installation and maintenance.

This will provide a more attractive vertically integrated offering and enable better penetration into new energy markets.

The purchase of Piping Solutions is funded from Saunders’ cash reserves and the issue of new shares.

Piping Solutions generated FY2023 revenue of $40.8 million and adjusted Earnings Before Interest and Tax (EBIT’ of $3.60 million. Saunders is acquiring the business with effect from 1 November 2023.

Piping Solutions was established in 2004, is based in QLD and employs approximately 100 team members across Management, Engineering and Operations, located at the Brisbane Head Office and various project sites across QLD, NSW and the NT.

Piping Solutions’ existing Directors, Mr Linkon Allan and Mr Rowley Hill, and the management team, including Executive General Manager Shane Tynan, have committed to continuing their roles in the combined Saunders Piping Solutions business. The team is aligned to Saunders’ values and One Team culture.

Importantly, Piping Solutions’ specialist skills will form a foundation for entry into New Energy markets including:

• Green hydrogen infrastructure;
• Green liquid ammonia infrastructure;
• Natural gas infrastructure upgrades to facilitate the transition away from coal;
• Green biofuel refining and distribution;
• Waste to energy infrastructure; and
• Water and wastewater infrastructure.

The combination of Piping Solutions’ core services with Saunders’ multidisciplinary construction and control systems expertise, creates a compelling project management and delivery capability. Please see attached Investor

Saunders has agreed to acquire the Business and Operating Assets of Piping Solutions, cash-free and debt-free, for a purchase price of up to $20.0 million. The purchase price is based on an initial instalment of $13.0 million and a second instalment of up to $7.0 million, subject to the achievement of Piping Solutions’ Earnings Before Interest and Tax (EBIT) targets for the 12-month earn-out period commencing from 1 November 2023.

The initial instalment of $13.0 million will be paid in cash ($6.50 million) and equity ($6.50 million, based on the 30-trading day Volume Weighted Average Price of Saunders shares prior to completion).

The second instalment, subject to achievement of earn-out EBIT targets, will be paid in cash (50%) and equity (50%).

The acquisition is structured to promote the continued performance of Piping Solutions.

Piping Solutions’ Directors, along with Piping Solutions’ management team, have agreed to continue in their positions post-completion.

Linkon Allan, Rowley Hill and Shane Tynan said, “We are excited to join the Saunders team. There is a strong alignment between our businesses, both culturally and strategically, as well as operationally. Bringing our teams together is a logical progression, positioning both Piping Solutions and Saunders for future growth.”

Saunders’ Managing Director and Chief Executive Officer, Mark Benson said, “We are pleased to have executed the acquisition of Piping Solutions and we look forward to welcoming Linkon, Rowley, Shane and all the Piping Solutions team into Saunders.

The acquisition will expand Piping Solutions’ existing capabilities and reach, while enhancing Saunders’ service offering to our existing clients and further accelerate Saunders’ expansion into the defence sector.”

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