BusinessDesk report by Paul McBeth
Tru-Test Group, the Auckland-based agri-tech group that ranked 16th on the TIN100 survey of the country’s top research and technology firms, has bought milk storage and refrigeration firm Dairy Technology Services from local manufacturer NDA Group for $73 million.
The company raised $5.4 million in a two-for-nine renounceable rights issue at 96 cents apiece, which it said would be used to help fund the DTS acquisition. Though Tru-Test today said it wouldn’t disclose the value of the acquisition, the December offer document and later amendment put the purchase price at $73 million, subject to adjustments based on working capital.
The acquisition included $68 million in non-current assets, of which $67 million were intangible, and would see Tru-Test take on up to $58 million in bank debt to help fund the deal. Tru-Test expects DTS to add 40 percent to its earnings before interest, tax, depreciation and amortisation, which were $5.9 million in the 12 months ended March 31 last year on sales of $103.4 million.
The purchase follows on from Tru-Test’s $1 million acquisition of Radian Technologies in December as it looks to provide more integrated support for dairy farmers, chief executive Greg Muir said in a statement. DTS employs 80 staff at its Taranaki manufacturing facility and administration and sales office in Hamilton.
“The dairy industry will increasingly need to integrate new technologies and services if it is to achieve the sustainable growth it seeks,” Muir said. Farmers “want stronger levels of support on farm to maximise the value of technology investments and ensure the efficient ongoing operation of farm systems.”
Tru-Test manufactures livestock weigh scale indicators, milk metering equipment, electric and traditional fencing tools and dairy automation systems.
Press Release – Tru-Test
Auckland-based agri-tech company Tru-Test Group has today announced the acquisition of Dairy Technology Services from NDA. The move is the second such deal completed by Tru-Test Group in recent months, following its purchase of Radian Technologies (MilkHub) in December.
Dairy Technology Services (DTS) is the leading provider of milk storage and cooling systems in the New Zealand dairy industry. It employs 80 staff in its manufacturing facility in Taranaki and its nationwide sales, installation, repairs and maintenance and customer service operation based in Hamilton.
The deal reflects NDA’s desire to focus on its engineering activities in the dairy processing and transport, chemicals and refining, wine and resources industries.
NDA’s CEO Mark Eglinton says it is a logical move.
“This is a positive step for both parties. We believe DTS is a natural fit for Tru-Test and the sale gives NDA greater capacity to deliver our growth strategies for our core engineering business in New Zealand, Australia and North America”
Tru-Test Group CEO Greg Muir says the DTS acquisition is part of a strategy that aims to deliver improved levels of integrated support for dairy farmers.
“The dairy industry will increasingly need to integrate new technologies and services if it is to achieve the sustainable growth it seeks. Having both DTS and MilkHub within Tru-Test Group is an example of this sort of integration in practice.
“Tru-Test Group’s DNA is on-farm, and our product development is a result of working closely with farmers every day. We know they want stronger levels of support on farm to maximise the value of technology investments and ensure the efficient ongoing operation of farm systems.
“They want more than having products ‘dropped off at the gate’. They want support from organisations with the resources, skills and knowledge to successfully deploy across all aspects of planning, installation, start up, training, monitoring and maintenance,” Mr Muir said.
The value of the acquisition will not be disclosed.