In a transaction worth $7.25 million, Western Australian engineering group Monadelphous signed an agreement in late March to acquire the New South Wales dragline and shovel maintenance provider.
With a focus on coal mining equipment and material handling facilities, Singleton-based Ellavale serves the NSW coal sector and boasts big name customers such as Rio Tinto, Anglo Coal and Xstrata. Upon completion of the acquisition, the company will be integrated into Monadelphous' maintenance and industrial services division.
The engineering firm said the takeover would provide better access to the eastern states resources market and boost the WA company's recurring services revenue base.
Monadelphous managing director Rob Velletri said: "We have a broad strategy of increasing or expanding our business into coal and coal services. Ellavale have particular expertise in dragline maintenance and overhaul in the Hunter Valley and we're keen to build that expertise with the aim of expanding that into the Bowen Basin in Queensland."
He said the company had targeted Ellavale because of its position in the Hunter Valley and also because it would enable Monadelphous to take the Singleton enterprise's operational expertise throughout the coal industry.
Ellavale general manager Rob Seath saw the friendly takeover as a national company proactively looking to bolster its business.
"Companies like Monadelphous that see a gap in their armoury have been out looking for somebody with some special expertise, which is exactly what happened here. They had no dragline and shovel expertise themselves, and that is primarily ours, and they bought us for that reason," Seath said.
Asked what the Hunter Valley region stood to gain from the takeover, the Monadelphous boss drew attention to job opportunities.
"I think if people are part of a significant, growing organisation [it will] provide employment opportunities for the region," Velletri said.
"We're keen on expanding our business through the Hunter Valley and providing opportunities right throughout our business. We've got around 4000 people across the country already, so it's really a terrific opportunity for people in the Hunter Valley."
Of the $7.25 million takeover total, $2.75 million will be satisfied by the issue of Monadelphous shares.
A provider of engineering construction, maintenance and industrial services to the resources and infrastructure industries, Monadelphous grew out of mechanical contracting company Contract Engineering Associates. After striking financial difficulties in the 1980s, the company was later bailed out and revamped. By 2006 Monadelphous boasted a sales revenue of a $532 million.