Analysts have predicted that mergers and acquisitions in the mining services sector will increase following a spate of deals, including the $1.2bn takeover bid for commercial service provider Spotless and Emeco’s three-way merger with rivals Orionstone and Andy’s Earthmover.
Campbell Jaski, a partner with PPB Advisory, has said that the sector is in perfect condition for mergers and acquisitions to pick up.
“We have seen that when the mining sector turns from full-scale development into production it creates an oversupply of mining services contractors and it is difficult for the contractors to deal with that,” he told The Australian Financial Review. “There needs to be consolidation in the sector to reduce that oversupply.”
Jaski led the PPB team responsible for the preparation of the independent report on the Emeco deal, and he believes that the merger will inspire others like it.
“I think this is a turning point because it is one of the first major recapitalisation and consolidation plays in the mining services sector and I think people can clearly see the benefits,” he said.