International high technology company Sandvik Group has completed a $106 million friendly takeover of drilling equipment company SDS Corporation Ltd, with commercial law firm Thomson Playford acting for SDS and Allens Arthur Robinson acting for Sandvik in Sydney.
The offer was received by SDS in April, after Thomson Playford had spent seven months working with the company looking for a suitable business partner to take it to its next level of development. The firm spent more than a year on the deal in total, going through a time-consuming process of looking at each option available to the company. Industrial shareholders had demanded short term returns which put the company under pressure, yet the majority of shareholders had a longer term view, said Thomson Playford’s Loretta Reynolds, partner in Adelaide.
Options had included a buyback, a trade sale, or finding a party to take the company over. The takeover option was considered the best for stakeholders, beginning a seven-month search for a suitable business partner. Sandvik made the most attractive bid at $1.14 in cash for each SDS share. The figure was a significant premium on the trading price over recent months.
“It was the best outcome for shareholders,” said Reynolds. “It is also exciting from an industry perspective because of the expertise that Sandvik will bring to SDS.” Reynolds cited the greatest legal challenge in the deal as needing to bear in mind the interests of various shareholders as a takeover candidate was found.
The deal eventually closed on 25 May with Sandvik holding 98.21 per cent of SDS shares — a “pretty resounding result”, said Andrew Finch, Allens Arthur Robinson’s corporate practice partner who worked on the deal for Sandvik.
Sandvik is now looking to compulsorily acquire the outstanding shares.
Based in Sweden, the company had been looking to diversify from its traditional mineral development business into exploration equipment and services. “SDS is the leading company of exploration equipment and services, with expertise in techniques like reverse circulation drilling,” explained Finch.
“This was a good start for the expansion of Sandvik’s core business.”
Both partners working on each side of the deal mentioned that, unusually, the target statement and the bidder statement were drafted and presented to the shareholders as a single bound document, rather than at separate stages in the deal.
Thomson Playford’s Lyn Nicholson worked on the deal from the firm’s Sydney office. SDS’s financial advisers, Equity & Advisory, also consulted in the friendly takeover.