CPC Engineering will consider inorganic growth as majority owner ponders exit – CEO

19 January 2021 - 04:00 am UTC

by Adam Orlando in Perth

CPC Engineering, the 50-year-old Australia-based engineering design, construction, and maintenance services firm, will consider acquisitions “down the line” as it grows into additional market segments, CEO Glen Weir said.

 

The Perth-based company, which has more than 300 employees, has “been offered a number of smaller organisations in the past”, although it had previously preferred to grow organically, Weir told Mergermarket.

 

CPC now sees scope to grow inorganically and further down the track will eye niche targets, particularly those with a service offering not currently in CPC’s portfolio that complements its existing operations, he said.

 

The company will likely use advisors and consultants to assist with any M&A, the CEO said, adding that CPC has a good relationship with advisory firm KPMG.

 

Weir did not disclose how much CPC could spend on a deal nor on the specific timeframe. However, while in March 2020 the company’s revenue took a hit amid the novel coronavirus pandemic, by the end of April last year it began a recovery and CPC is now on track for healthy revenue this financial year, meaning it will not rush into any deals, he said.

 

Also, the company has a strong pipeline of work and is actively looking to expand its labour force, Weir said.

 

One particular market segment CPC is actively looking to grow into is the oil and gas sector, having already dipped its toes in Karratha working on non-process infrastructure for energy giant Woodside [ASX:WPL], he said.

 

Historically, the company’s clients have included mostly mining companies such as Lynas [ASX:LYC], First Quantum [TSE:FM], and Western Areas [ASX:WSA]. Other major clients include the Water Corporation, the principal supplier of water, wastewater, and drainage services throughout Western Australia, and CBH Group, which is Australia's largest exporter of grain, the CEO said.

 

Exploring an exit

 

Founded in 1970 by Peter Bowman, who is a majority shareholder currently serving as chairman and who turns 80 years old this year, the strength of CPC has been the “family type feel” of its operations. This has meant it has been flexible, but an exit option for the company would need to be addressed at some stage, Weir said.

 

Although there are no specific plans for an IPO or trade sale, Weir noted that while CPC had “politely turned down” takeover interest in the past, it may need to start taking more notice of approaches as time goes on.

 

CPC is a diversified engineering services company that offers minor and sustaining capital works; shutdown management and execution; mechanical, electrical, and civil works; scaffolding; and labour hire, among others, the company’s website said.

 

Its peers and competitors are many, including Decmil Group [ASX:DCG], Downer EDI [ASX:DOW], DRA GroupGoodlineLinkforceMonadelphous [ASX: MND], Primero [ASX:PGX], and privately owned Kerman Contracting, Weir noted.

 

CPC has workshops and operations throughout strategic locations in Western Australia including Karratha, Port Hedland, Kalgoorlie, Kambalda, and Albany with each region having specific strengths depending on its location. 

 

Write to Adam Orlando at adam.orlando@acuris.com