Another Western Australian Family Company Bought

"In a move perhaps motivated by a realisation that the company needed greater perspective and better resourcing beyond just a localised base and parochial attitude TCC Group a predominantly family based company was sold to international oil and gas services provider Cape Plc.The changes that this will bring in regrd to change management/organisational change will be interesting to say the least.To have to have sold to an overseas company is perhaps sad in the sens e that it no longer is a purely western australian owned and operated company but one controlled and based ultimately in the UK.Implications for sustainability devlopment/approaches and health and safety perspectives and fit will be intertesting to see as well.The company goes from approximately 700 workers to connecting with a company that has 8000 workers in 24 countries.similarity in activities is one fit the company has ..but cultures will of course still have to be merged and evolve/be managed effectively to gain the best out of such a deal.Lets hope for the best."

[q url="http://www.wabusinessnews.com.au/en-story/1/56085/UK-s-Cape-buys-TCC-from-Iannello-family-for-85m"]Sunday August 26, 2007

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UK's Cape buys TCC from Iannello family for $85m

23-August-07 by Mark Pownall

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UK-headquartered oil services company Cape plc has bought Kwinana-based mining and industrial processing services company TCC Group in a cash and scrip deal worth at least $85 million.

The acquisition follows Cape's failure earlier this month to secure PCH Group Ltd for $1.30 per share(about $230 million) making the offer after conducting due diligence.

The TCC sale is one of a number of recent significant private sell-downs of services companies in Western Australia as founders and management seek to take advantage of the buoyant times.

Formerly Total Corrosion Control, TCC's sellers Terry and Tony Iannello and Sam Cinalli can boost the sale price by up to a further $12.5 million if the WA operation achieves its earnings target for the year ending June 2008.

In a statement released to the London Stock Exchange, Cape said it will pay an initial $65 million in cash and $20 million in new Cape shares, in what is its third acqusition for the year.

TCC, which operates mainly in Western Australia, had earnings before interest, depreciation, tax and amortisation of $14.9 million in the year to end-June on turnover of $113.6 million.

TCC has regional offices in Karratha, Port Hedland and Portland in Victoria.Its main customers are BHP Billiton, Alcoa, Rio Tinto, BP Refineries, the Murrin Murrin Nickel Mine and Woodside.

TCC managing director Terry Iannello, who was one of the group's founders 25 years ago, said Cape's international strengths would be well coupled with the TCC Group's long expertise in the Australian market.

Mr Iannello said the existing management planned to stay on and the group would eventually trade as Cape TCC.

He said Cape has a small office in Australia, having downsized its presence here since the two companies last worked alongside eachother on the North West Shelf's third train.

"We need to grow over east and get bigger and have the capacity to take on bigger projects," Mr Iannello said.

Cape has more than 8,000 staff operating in 26 countries, TCC has 700.

Also announced today, Perth's MacCormick family has agreed to sell its Maddington-based engineering and tunnelling business, DJ&MB MacCormick Civil Engineering, to ASX-listed contractor Walter Diversified Services Ltd for $35 million.

Other recent deals include:

Sydney-based Crane Group Ltd bought Welshpool's Kingston Bridge Engineering Pty Ltd for $100 million

English company Intertek Group plc paid $56 million for Maddington-based minerals testing business Genalysis Laboratory Services Pty Ltd.

Belmont-based Paladio Group Ltd paid $54 million for Pilbara construction firm Decmil Australia Pty Ltd.

Northbridge-headquartered VDM Group Ltd acquired Welshpool earthmoving contractor Malavoca for $45 million, the biggest of $98 million in purchases which also included Wylie & Skene, Como Engineers and Barlow Gregg.

ASX-listed Coote Industrial Ltd, another Maddington company, paid $25 million for Kewdale rail company South Spur Rail Services, before also buying North Fremantle-based FCD Container Logistics for $12.5 million. Coote aslo bought GEMCO Rail for $33.8 million.

West Perth-based engineering services company Neptune Marine Services Ltd bought Midland company Tri-Surv Pty Ltd, paying $16.4 million in cash and scrip for the specialist hydrographic surveyor. It also bought Subsea Developments Australia for at least $5.5 million, plus earn-out.

Late last year, NSW-based steel player Bradken acquired Wundowie Foundry Pty Ltd in Western Australia for $8 million.

Cape PLC (AIM:CIU), the international provider of essential support services to

the energy sector, announces that it has agreed to acquire the Australian based

Total Corrosion Control group of companies ("TCC Group").

These arrangements, which are due to complete on 31 August 2007, are between

Cape Australia Investments Pty Limited ("Cape Australia"), a wholly-owned

subsidiary of Cape PLC and the shareholders of TCC Holdings (2005) Pty Ltd ("TCC

Holdings"), the ultimate holding company of the TCC Group.

Cape Australia has agreed to acquire all of the issued share capital of TCC

Holdings for a consideration that reflects an enterprise value for the TCC Group

of A$85.0 million (£34.3 million)1.. Subject to the TCC Group achieving its

earnings target for the year ending 30 June 2008, up to a further A$12.5 million

(£5.1 million) will be payable.

The initial consideration payable at completion will comprise A$65.0 million

(£26.3 million) in cash and A$20.0 million (£8.1 million) in Cape new ordinary

shares ("Initial Consideration Shares") (at an issue price per share calculated

by reference to the volume weighted average price of Cape's ordinary shares over

the five business days immediately preceding 31 August 2007) which will be

subject to orderly market provisions concerning their disposal over the two

years following completion. The additional consideration will be payable in

cash.

At completion, application will be made for the Initial Consideration Shares to

be admitted to trading on AIM.

The TCC Group, which operates mainly in Western Australia, offers a wide range

of industrial services to blue chip clients in the mining, oil, gas and

construction industries. The TCC Group specializes in the provision of blasting,

industrial painting, protective coatings, thermal and acoustic insulation, sheet

metal fabrication, rubber lining and access scaffolding. The TCC Group is

headquartered in Kwinana where it operates one of the largest blasting and

painting workshops in the world. It also has regional offices at Karratha and

Port Hedland. Its principal customers are BHP Billiton, Alcoa, Rio Tinto, BP

Refineries, the Murrin Murrin Nickel Mine and Woodside.

In the year to 30 June 2007, the TCC Group's turnover was A$113.6 million (£45.9

million), its earnings before interest, depreciation, tax and amortization were

A$14.9 million (£6.0 million) and it generated earnings before interest and tax

of A$14.0 million (£5.6 million). The approximate value of the net assets being

acquired at completion is A$ 18.2 million (£7.4 million). Cape's Directors are

of the opinion that the acquisition will be earnings enhancing in the first

year. 2.

PricewaterhouseCoopers Corporate Finance and DLA Phillips Fox acted for Cape on

this transaction. Middletons acted for the TCC Group's current shareholders.

1. For the purposes of this announcement a conversion rate of A$1: £0.404 has

been used.

2. This statement should not be interpreted as a profit forecast and does not

necessarily mean that Cape's future earnings per share will match or exceed

Cape's reported historical earnings.

Cape's Chief Executive, Martin May, said:

"Cape's agreement to acquire the TCC Group is a major milestone in the

achievement of Cape's international strategic plan. I am pleased to say that our

dealings with the TCC Group, from initial discussions through exclusivity and

due diligence to completion, have been conducted in a timely and professional

manner which is much to the credit of the TCC Group's vendors, advisers and

senior management.

Cape's Directors believe that following completion of the acquisition

agreements, the TCC Group will bring immediate benefits to both businesses. The

TCC Group will provide a stable platform from which to develop Cape's existing

Far East/ Pacific Rim businesses while significantly extending Cape's footprint

in the region. The TCC Group's blasting, painting, insulation and access

services are all key components of Cape's core disciplines. The TCC Group's

established presence in Australia's booming resources sector offers Cape an

opening into a huge new market. With this platform in place, Cape will not

solely be reliant on making acquisitions in Australia but will also be able to

achieve organic growth by competing on both price and quality of service.

We are also delighted to have secured the continuing involvement of the TCC

Group's highly experienced senior management team and its skilled blue-collar

workforce. Moreover, as part of its commitment to the region, Cape plans over

the coming months to relocate its regional head office from Singapore to Perth,

Western Australia. In the meantime, Cape will shortly complete on a lease of

premises in the Darwin area from which to support offshore works on the North

West Shelf and will continue to pursue other complementary acquisition

opportunities and targets in Australia."

Terry Iannello, the TCC Group's Managing Director, said:

"The TCC Group is excited by the new phase of growth offered by our inclusion in

the Cape group of companies. Cape's international strengths, coupled with the

TCC Group's long expertise in the Australian market, will provide many

additional benefits and services to our clients, as well as additional

opportunities for our staff and management. We look forward to working together

to provide even more high quality services to the energy, mining, oil and gas

industries in Australia. We have also been impressed with the ease of the

process and the negotiations with Cape and look forward to working together as

Cape TCC."

Cape PLC is the parent company of a number of service providing organizations

operating primarily in the oil and gas, petrochemical and power generation

industries.

In the year to 31 December 2006, Cape reported turnover of £295.5 million.

Cape currently employs c. 8,200 people in 23 countries worldwide.

Cape specialises in the provision of scaffolding, insulation, fire protection,

specialist cleaning and other essential services to major industrial clients in

the energy sector.

Cape's ability to provide specialist cleaning services was enhanced by the

acquisition of DBI Group Limited in October 2006.

On 23 April 2007, Cape's shareholders approved the placing of 26,923,077

ordinary shares at £2.60 per share to raise £70 million (before expenses).

On 6 June 2007, Cape acquired Total Rope Access International Limited.

On 22 June 2007, Cape acquired Endecon Limited.

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