Analytical testing services group ALS Ltd will buy global oil and gas services provider Reservoir from US-based SCF Partners to increase its exposure to the growing oil and gas industries.
ALS will pay $579 million for the UK-based company and its shares have been put in a trading halt until Friday as it launches a $246 million rights issue for shareholders to help fund the acquisition.
The remainder of the purchase will be funded through a new $US275 million ($304.49 million) debt facility, a share issue to Reservoir senior management and ALS cash reserves.
ALS has also agreed to acquire Australian-based Earth Data, a provider of niche sampling and analysis services to Australia's oil, gas and coal industries.
Chief executive officer Greg Kilmister said the acquisitions were part of the company's efforts to increase its exposure to the high-growth oil and gas sectors (see Sam Fimis's Oil and Gas: The global view).
"The acquisition will considerably broaden our capabilities in upstream oil and gas and will strongly complement our existing laboratory services," he said.
He said ALS's focus on laboratory services would complement Reservoir's existing portfolio of technical services.
ALS plans to build at least three oil and gas hub laboratories to service the global market.
The company has focused on pursuing new markets in recent years to offset its exposure to the weakening mining sector.
Meanwhile, ALS says it expects its underlying net profit for the six months to September 30, 2013, to be between $95 million and $105 million.
ALS shares last traded at $9.41.