Aussie cleantech company Parkway (ASX: PWN), which builds water treatment solutions, has acquired Tankweld Group, comprising the Tankweld Engineering Service and Tankweld Installations divisions.
The $2.6 million acquisition of Tankweld Group has major benefits for Parkway. First, the Company now has greater project execution capabilities, which helps in technology commercialisation. Second, the acquisition improves Parkway’s revenue growth potential.
Parkway’s Group Managing Director & CEO, Bahay Ozcakmak, said, “This transaction immediately transforms Parkway into a fully integrated industrial water treatment solutions company, generating substantial revenues (>$20m on a consolidated basis), capable of delivering significant water and wastewater treatment related infrastructure, including plants incorporating proprietary Parkway technologies. This is a very significant and exciting milestone for both Parkway and Tankweld and the beginning of the next chapter of the Parkway journey.”
Tankweld, based in Melbourne, offers comprehensive engineering solutions from design to installation across various sectors, including water, oil, and chemicals. Established in the 1940s, it’s a trusted partner for industry and utilities like Melbourne Water. With over 40 skilled employees, Tankweld operates from a sizable facility with advanced fabrication capabilities. It has achieved significant growth in recent years, with $16.5 million in revenue in FY23.
Parkway’s acquisition payment includes an upfront component, $0.65 million in cash (already paid), and a provisional $1.75 million loan settlement, to be paid shortly from existing cash reserves upon finalisation of loan repayment documentation. Plus, a deferred component of $0.20 million in cash is payable from Tankweld’s cash flow.
What’s more, the acquisition not only benefits Parkway but also Tankweld. Parkway’s process engineering capabilities will assist Tankweld in providing a broader range of value-added scope, supporting the execution of larger, more complex, higher-margin projects for its clients.
Tankweld Group General Manager, Jeff Harley, commented, “In recent years, due to various market forces, we have witnessed significant consolidation of industrial engineering and manufacturing operations in Australia, in response to a range of industry challenges. Despite these challenges, we have continued to focus on delivering quality and value for our clients, and as a result, during the last five years, we have more than doubled the size of our business by revenue and see every opportunity to continue to achieve this rate of growth going forward.”
He added, “In coming months, as we progress with the integration of Tankweld into the Parkway group, I look forward to updating all our existing partners, suppliers, clients, and other stakeholders on the transformational nature of this transaction and why the future for Tankweld has never been brighter.”
As part of the acquisition, Parkway has obtained significant plant and equipment from Tankweld, such as containerised workshops, a generator, and a fleet of vehicles, including utility vehicles, forklifts, and a specialised crane truck. Moreover, Parkway has acquired various items in its inventory, including raw materials, products, parts, and spares.
The purchase of Tankweld is highly accretive and opens up several promising growth prospects in the near future. Tankweld brings in a substantial project backlog of over $10 million and anticipates further opportunities worth more than $20 million in the short term. With this acquisition, Parkway Group’s combined annual revenues are estimated to exceed $20 million on a pro forma basis, enhancing operational efficiency and offering significant operating leverage.
The acquisition of Tankweld is anticipated to pave a near-term pathway to profitability for Parkway.
Alinda is a Business Reporter for The Sentiment
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