What's happened
SciDev Limited (ASX:SDV; SciDev) has entered into a binding Heads of Agreement to acquire Highland Fluid Technology Inc (Highland), a US private company supplying bespoke chemistry and services for fluid recycling and water reuse in the US$2.5B onshore oil and gas sector.
Why is this significant?
SciDev have supplied products to Highland for commercial evaluations with end users in 2019. SciDev’s chemistries have passed both technical and commercial milestones with both Highland and their clients and are now ready for commercial roll out.
What are the key highlights?
- Highland delivered revenue of c.US$~7.8m in CY2019. A milestone payment of US$1m (inclusive in the US$6m total acquisition price) is payable upon the Highland business delivering US$20m in revenue at a target EBITDA margin in CY2020.
- Highland’s management team, including existing director Kevin Smith, and oilfield experts Chad Abbott and Tom Lingle will remain within the organisation, expanding the SciDev North American footprint in support of continuing business development opportunities
- The acquisition of Highland is expected to contribute positive cashflow and profitability to SciDev from the date of acquisition. The transaction is expected to be EPS accretive in FY2021, the first full year integration.
