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Perth-based resource services group Babylon Pump & Power (ASX: BPP) is acquiring BPY Holdings, owner of pumping and hydrotesting solutions specialist Blue Hire, in a deal worth up to $26.2 million that the company says provides it with “significant earnings power”.
Babylon is paying $18 million up front for the fellow Western Australian company which provides pump and power equipment for dry hire across the mining, marine and agriculture sectors.
The payment comprises $16.35 million in cash and $1.65 million in shares, representing a 2.5 times FY24 EBITDA multiple, but Blue Hire is also eligible for a deferred payment of between $6 million and $8.2 million based on the performance of the business.
The buyout follows a separate deal by Babylon last month for Matrix Hydro Services, a WA-based specialist in aquifer testing and groundwater services, for $2.5 million.
Babylon says the acquisition of its competitors positions the group as a “scaled, specialist provider, with expertise in equipment rental and advanced technical water services”.
Babylon CEO Michael Shelby says the latest deal marks “a step-change in our rental capability” as Blue Hire founder Byron Ynema will join the Babylon team following the acquisition to manage the group’s combined rental fleet.
“This milestone delivers the meaningful rental scale that we have been chasing, strengthens our geographic reach and adds a proven, profitable dry hire business to our platform,” says Shelby.
“With Byron joining the team, we are confident in a seamless integration and in delivering sustained growth.
“Together with the acquisition of Matrix, this deal positions Babylon as a true specialty water services provider to Australia’s resource sector. With our scalable platform now in place, we’re entering a new chapter for Babylon with a larger rental fleet, increased market share and an expanded leadership team.”
The combined rental business, including that of Matrix and Babylon's existing fleet, will boost the group's assets to more than 340.
Babylon says the acquisition will add “significant earnings power and margin enhancement” to the group, based on the financial performance of Blue Hire for the 2024 and preceding financial years.
On a pro forma basis, including the contributions from both Matrix and Blue Hire, Babylon FY24 group revenue would have been about $54 million with EBITDA of about $14 million.
Babylon says Blue Hire’s solid EBITDA margin will provide “an immediate uplift to Babylon’s overall profitability”.
Babylon posted a net profit of $508,027 in FY24 from revenue of $41.7 million, a sharply improved result from the previous year’s bottom-line loss.
The half-year profit for FY25 was $398,303, up 64 per cent, as revenue dipped 22 per cent to $17.38 million. Half-year EBITDA of $2.98 million was down 2.1 per cent compared with a year earlier.
Babylon plans to complete the acquisitions of Matrix and Blue Hire by 30 June 2025.
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