Applus+ acquires Saudi Arabia testing and inspection services company
10/02/2021
Applus+, a global testing, inspection and certification company, has announced the acquisition of the entire share capital of Soil & Foundation Company Limited and Geotechnical and Environmental Company (which together form the SAFCO Group) from the founding partners. Completion is expected to take place in the first quarter of 2021. SAFCO Group will form part of the Energy & Industry division.SAFCO Group is the largest and oldest company in Saudi Arabia to provide construction-based testing and inspection services, having built this position over the past 40 years. It provides on-site and laboratory-based testing for the materials used in construction projects as diverse as small commercial buildings to mega projects, as well as soil investigation services and environmental inspection and consulting.
It has a strong reputation and good brand recognition in the industry, which will immediately support Applus’s expansion within the construction, building and environmental products testing services in the region where Applus+ is already present servicing mainly other end-markets. SAFCO Group generated circa €29 million (£27.5 million) of revenue in 2019 at margins significantly higher than Applus+ and continued growing revenues over the first nine months of 2020 despite the disruption of the pandemic. This was due to its strong footprint within the region through its 16 branches across the country and a well-diversified customer base and favourable end-market trends.
Ramon Fernandez, Executive Vice President of the Energy & Industry Division, said: “The SAFCO Group is a well-established, successful and profitable business in the attractive construction market in a country that has many projects planned, including for those under Vision 2030 where, alongside the additional services that Applus+ can bring to their clients, we see tremendous opportunity for the combined business to expand in the country and the wider region.”
Fernando Basabe, Chief Executive Officer of the Applus+ Group, said: “We are delighted to welcome the people of the SAFCO Group to Applus+. This acquisition will help us to continue diversifying the business into markets where we see strong potential for growth and a good strategic fit with Applus+. This rounds off a successful year of acquisitions, having completed two before the start of the coronavirus pandemic and four in the last three months, culminating in a total revenue acquired of €136 million [approximately £120.6 million] at a pre-IFRS 16 EBITDA margin percentage in the low to mid-twenties. We expect to continue making more acquisitions like this next year.”
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