Major Drilling to buy Taurus Drilling ops for $39M

New Brunswick-based drilling contractor Major Drilling (TSE:MDI) said Monday it has agreed to buy Taurus Drilling Services's operations in a $39 million deal.

In a statement, Major Drilling said that on closing it will pay $15.9 million in cash, $7.5 million in Major Drilling shares and $4.3 million in assumption of debt, adding up to $27.7 million.

On top of this, Major Drilling will pay a maximum of $11.5 million tied to performance, according to the statement. The additional payout period lasts for three years, beginning August 1, with payments contingent on growing EBITDA run rates above current levels.

The purchase will result in Major Drilling–which operates in Canada, the U.S., Mexico, South America, Australia, Europe, Asia, and Africa–obtaining 39 drill rigs as well as related equipment, inventory and contracts.

Taurus Drilling Services provides underground percussive/longhole drilling to mining company clients. With operations in Canada, the U.S. and Mexico, it produced revenue of about $38 million and EBITDA of around $8 million over the past 12 months.

"The Taurus acquisition opens the door to additional diversification in the mining industry as percussive longhole drilling is more related to the production function of a mine," said Francis McGuire, Major Drilling's president and CEO.

"Offering both underground production drilling and our existing underground core drilling, we can now provide an even wider range of complimentary services to our clients," McGuire said.

The deal is set to close August 1.