Tenix sold to Downer for $300 million

Engineering and infrastructure services provider Downer has acquired all the shares in Tenix for $300 million on a cash and debt-free basis. Tenix provides services to owners of gas, electricity, water, wastewater and industrial assets across Australia, New Zealand and the Pacific, employing over 1600 industry specialists based across more than 90 offices, depots and operational sites.

Tenix Chairman Paul Salteri AM described Downer as “a leading Australia player in the engineering and services sector”. He said Downer will be “looking to Tenix as a strategic growth platform into the power, gas and water sectors … [creating] exciting opportunities for all Tenix staff”.

Downer CEO Grant Fenn noted that Tenix has strong, long-term relationships with some of the largest utility businesses in Australia and New Zealand. Thus, the company will be “the foundation for a new core utilities business for Downer”, he said.

“There are strong prospects for future growth,” Fenn said. “Tenix has played a leading role in driving efficiency from the privatisation of electricity networks in Victoria and South Australia and is well placed to do the same in other states as power distribution assets are privatised.

“Tenix also designs, constructs and maintains water and wastewater treatment plants for a number of municipal councils and has developed a reputation for providing leading solutions for its customers in this sector.”

The acquisition of Tenix will be funded through a $300 million committed bank debt facility. As a result, Downer’s on balance sheet gearing is projected to be around 10% at 30 June 2015. The transaction will be completed on 31 October 2014 and the acquisition will be earnings per share accretive in the first year.

Salteri said the decision to sell Tenix “has been difficult for shareholders, as we believed the business is well positioned in its markets to take advantage of exciting growth opportunities … but ultimately in the best interests of the company and the employees”.