ALS entered into an agreement to acquire Reservoir Group for US $533 million (9.6 x Reservoir's FY2013 EBITDA). The transaction follows extensive due diligence undertaken by ALS on Reservoir as a part of an exclusive sale process.
Reservoir is a global provider of specialist oil and gas services and equipment that assists with the evaluation, development and optimization of oil and gas discoveries. Reservoir operates five segments: Coring (49% of Reservoir's FY2013 revenue); Laboratory Analysis (4% of Reservoir's FY2013 revenue); Surface Logging (28% of Reservoir's FY2013 revenue); Downhole Tools (4% of Reservoir's FY2013 revenue) and Specialist Well Services (15% of Reservoir's FY2013 revenue).
The existing senior management team of Reservoir has committed to continue in the business and is rolling over about 50% of their equity in Reservoir into ALS shares, which will result in Reservoir senior management having a 1.5% pro forma shareholding in ALS. Multi-year conditional escrow arrangements have been put in place for the two largest management shareholders and retention bonuses have been agreed with all key Reservoir senior management.
ALS also agreed to acquire Earth Data for about US $16.2 million. Earth Data is an Australian-based provider of gas sampling and analysis services to Australia's oil and gas industries, and safety monitoring sampling and analysis for fugitive emissions to Australian coal mines. Earth Data operates laboratories in Brisbane and the Hunter Valley, and employs about 60 staff.
Completion of the acquisitions of Reservoir and Earth Data are subject to limited conditions precedent and were completed early August 2013. The acquisition of Reservoir was conditional on ALS securing U.S. antitrust approval and no material adverse change in Reservoir.
The acquisitions of Reservoir and Earth Data are consistent with ALS' strategy to build an integrated global oil and gas solution, will significantly increase ALS' presence in upstream oil and gas services, and will increase the company's exposure to attractive, high growth conventional and unconventional oil and gas end-markets.
"Reservoir's specialist services and equipment deliver high margin, technical and patented niche solutions,” said ALS managing director and CEO, Greg Kilmister."The acquisition will considerably broaden our capabilities in upstream oil and gas and will strongly complement our existing laboratory services. ALS will now be able to offer clients a more integrated end-to-end service, which will enhance our market position and ability to compete for incremental work across the hydrocarbon reservoir value chain."