Pure Closes Acquisition of Pressure Pipe Inspection Co.
Pure concludes purchase for up to $34.9 million in cash and common stock of Pure
Pure Technologies Ltd. announced that it has concluded the purchase of The Pressure Pipe Inspection Co. (PPIC) for up to $34.9 million (CAD) in cash and common stock of Pure.
PPIC, a privately held company with headquarters in Mississauga, ON, Canada, is a provider of large-diameter water and wastewater pipeline condition assessment. PPIC is currently active in North America (including Mexico), South America, the Philippines and Hong Kong. For the fiscal year ended Sept. 30, 2009, PPIC had revenues of $14.6 million.
The base purchase price is $30 million with provision for a maximum additional payment of $4.9 million should PPIC generate revenues of $24.9 million for the fiscal year ended Sept. 30, 2010. The amount of the additional payment will be reduced on a dollar-for-dollar basis for every dollar that fiscal 2010 revenues fall short of $24.9 million. The purchase price is based on a PPIC working capital balance of $800,000 at closing and will be adjusted up or down on a dollar-for-dollar basis depending on the actual working capital at closing.
Consideration paid at closing was $8,955,776 in cash and Pure issued 3,782,476 shares valued at $4.44 per share, which was negotiated as part of the transaction. This consideration is net of a holdback amount, which, when released, would be paid in cash in the amount of $800,551 and a further 776,903 shares. Any additional payments will be paid approximately 29% in cash and 71% in Pure common stock with an attributed value of $4.44.
Following closing, Emerald Technology Ventures, PPIC's largest shareholder, has the right to nominate one director to Pure's board of directors. Subject to TSX Venture Exchange approval, Scott MacDonald, partner with Emerald Technology Ventures, will join Pure's board of directors.
Dr. Brian Mergelas, formerly the CEO of PPIC, is now Pure's senior vice president, corporate strategy & development. Mergelas has published over 50 papers in academic and industry journals, and is a recognized expert in the field of pipeline condition assessment.
"Today is a very exciting day for our clients and employees as we bring together our two companies to create a world-class solutions provider," Mergelas said. "Both Pure and PPIC have always strived to provide the best possible condition assessment and monitoring solutions, and together we will be able to offer a greater knowledge base and a stronger portfolio to help our clients. As always, our success will continue to be anchored around building long-term relationships that provide exceptional value and build trust."
"This is a significant milestone for Pure and for the international water technology sector,” said Pure's CEO, Peter Paulson. “The combined Pure/PPIC entity will be a world leader in the field of condition assessment and asset management for water and wastewater pipelines. We are excited about the opportunity to work with Dr. Mergelas and his team as we continue to build awareness of the need for cost-effective strategies and solutions for the enormous challenges facing pipeline operators around the world."