In a bid to expand its offerings, security services provider MCS Services (ASX: MSG) has acquired Highways Traffic, a traffic management company based in Western Australia.
After signing the Binding Terms Sheet in January 2022, the Company has finally executed a purchase agreement which is subject to operational, licensing and financing pre-conditions. The two companies are aiming to round off this acquisition within the next two to three weeks.
Highways Traffic offers a range of services, including the design, development and delivery of traffic management plans dedicated to safety of workers and road users. It also provides traffic management personnel, vehicles, variable message boards, arrow boards and general traffic signs. It also manages traffic at events, while MCS specialises in providing security for the same.
Highways Traffic is able to take advantage of ongoing major road developments and upgrades across metropolitan and regional Western Australia, employing some 95 operational staff plus six office staff and a fleet of 32 operational vehicles including three trucks mounted with attenuators. It is currently working on a slew of projects, including major road and freeway building for national civil construction consortiums in Perth.
MCS will acquire 100% of Highways Traffic from its founders, James and Carol Capelli. Highways Traffic will receive $1.8 million cash, of which $0.15 million has been paid as a deposit, $0.26 million of shares in the Company and up to $0.54 million after completion, payable in four quarterly instalments of up to $0.135 million each. The instalments are contingent on post-Completion revenue tracking at achieving $7 million in the 12 months after completion.
Both companies specialise in providing and managing specialised personnel in risk-mitigation roles, usually for high profile national clients in Western Australia. By combining their resources, MCS expects to leverage Highways Traffic’s client reach, marketing and other synergies to grow its client base.
The Company claims that it won’t be changing up the existing management officials. Existing senior management of Highways Traffic have signed incentivised employment agreements. Further, James Capelli will consult to the Company for a period of 12 months after Completion on matters related to Highways Traffic.
MCS has been actively looking for opportunities outside of its expertise, with a goal to add more verticals to its business. For instance, in FY22, it acquired certain business assets of a Perth-based Alarm/CCTV company with experience in sectors not previously targeted by the Company.
The Company is seeking more organic growth opportunities in its specialist security segments. It is also aiming to boost its reputation with existing clients to be able to work at more locations. Moreover, it is actively working to improve its marketing strategy to reach a greater audience.
Alinda is a Business Reporter for The Sentiment
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