NRW announces $200m acquisition

NRW Holdings (ASX: NWH) has executed a binding agreement to acquire 100% of Fredon Industries for an enterprise value of up to $200m on a debt free cash free basis.
The acquisition provides core capabilities, with a proven delivery platform with scale to access opportunities driven by energy transition, electrification, automation and digital innovation, according to NRW.
NRW chief executive and managing director Jules Pemberton comments on the acquisition.
“Fredon represents a strategically and financially compelling acquisition for NRW, with the potential to drive further growth across the business and create long-term shareholder value,” he said.
“Fredon hold strong market positions across its divisions, supported by longstanding tier-one client relationships and an experienced management team providing a full spectrum of solutions throughout the entire electrical and HVAC infrastructure lifecycle.
“The sheer scale of the opportunities for Fredon and the broader NRW group through the energy transition over the foreseeable future is significant. One example is the pipeline of data centres that (NRW) expect to be constructed in the coming years, where Fredon is well positioned through its ability to provide both electrical and HVAC services. This together with the pipeline across the industrial and resources sectors supports a very positive outlook for the future of the combined group.”
Fredon has a diversified portfolio of projects across a tier-one client base.
Its executive management team will remain with the business along with its workforce.
The procurement will deliver a fourth pillar called “EMIT”, aligning with NRW’s strategy to grow through expanding its service offering, delivering new capabilities and entering new addressable markets.
Fredon has limited exposure to the resources sector. NRW’s strength and reputation in this sector Australia-wide, will provide the group with significant future growth opportunities.
The asset will be funded from NRW’s existing corporate debt facilities, with the consideration to be paid in three tranches.
The first is initial cash — $122m in cash on completion. The second is earn out — up to $60m in cash payable after CY25 results, subject to performance hurdles. The third is deferred cash — up to $18m in cash, deferred two years from completion.
Fredon has clear visibility on FY26 earnings and is expected to generate revenue of about $840m and earnings before interests and taxes (EBIT) of about $40m.
The funding structure will result in short-term increase in gearing, returning to target (below 30%) in the medium term through expected strong group cashflows.
In addition, the acquisition represents another transformational milestone in implementing NRW’s growth strategy and delivers benefits for NRW shareholders according to NRW.
These benefits include increased and diversified maintenance services generating annuity style revenues and capital light, cash generative model with exposure to major infrastructure projects, offering a stable and scalable growth profile across several key sectors.