AusGroup/ Ezion

AusGroup/ Ezion: AusGroup is acquiring 100% of Ezion Offshore Logistics Hub (which operates Port Melville) and 90% of Teras Australia (which owns 2 landing craft tanks) for $55m. This is part of AusGroup’s strategy to expand its businesses to provide both onshore and off-shore marine services. $14m will be funded by cash, while the balance will be with 92.1m AusGroup shares (12.4% stake of AusGroup’s enlarged stake). Post this transaction, and if Ezion exercises its 110m share options, Ezion would have a total stake of ~27.2% in AusGroup. JPM guides that to build Port Melville, a cumulative capex of ~A$60-70m is required , but the acquisition will be earnings accretive from Year 2. Management guides that initial eranings will be solely from barge services; within the next 12 months, fuel storage and distribution, then finally the supply base business. AusGroup sees limited competition in this space as it views itself as Australia’s sole approved bunkering service provider. Had the deal been completed on 30 Jun’13, AusGroup’s NTA would have been A$0.32 instead of A$0.31, but EPS would have fell from A$0.02 to A$0.009