Africa-focused mining engineer and project manager MDM Engineering (MDM) has received a recommended merger offer from Australian engineering group Sedgman, valuing MDM at $109m (£68m).
At 181p a share, the offer represents a 23 per cent premium to MDM's one-month trading average and 9 per cent up on the previous day's close. Sedgman is offering 100 per cent cash to minority shareholders and a 70:30 cash:shares split for management.
MDM's first-half results suggest Sedgman is acquiring the company at a strong point. Revenue for the six months to 30 September soared 298 per cent to $78.9m, while pre-tax profit rose 145 per cent to $8.1m. Nevertheless, resources engineering businesses are cyclical, so joining forces to form a bigger group makes sense.
