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Mining services firm Bradken to take over AmeriCast

BRADKEN, a supplier of equipment and services to the mining industry, has agreed to acquire the remaining interest in US company AmeriCast Technologies for $114million to increase exposure to the resources sector.

The acquisition of the 83 per cent stake Bradken does not already own from funds managed by Castle Harlan and AmeriCast management will be funded primarily by a fully underwritten $110million placement to institutional clients.

Seven years of commodity price gains, underpinned by demand from China and other developing nations, is driving mining companies to expand rapidly and develop operations and increasing demand for services and equipment. Bradken said the acquisition would provide a US base to expand some of its mining consumables, add scale in China and leverage the group into growing resources markets.

"The acquisition of AmeriCast will significantly expand Bradken¡¯s capabilities in large steel castings and provide an American base from which to expand some of Bradken¡¯s mining consumable products," managing director Brian Hodges said.

Bradken shares are in a trading halt and last traded at $8.84.

Kansas-based AmeriCast has foundries and machine shops in North America, a trading office in China and manufacturers engineered steel castings larger than 4.5 tonnes for the energy and resources sectors. Bradken acquired its initial AmeriCast stake in November 2006 in a buyout with the company¡¯s management and Castle Harlan, with Mr Hodges joining the board.

AmeriCast was expected to deliver pro-forma normalised revenue of $354 million and earnings before interest, tax, depreciation and amortisation of $50 million for the 2008 financial year.

A $2 million placement to AmeriCast management and Bradken directors and a share purchase plan will be offered to help fund the acquisition, set to be completed within two weeks.