Fenner grows presence Down Under

ENGINEERING firm Fenner has extended its reach into the Australian mining sector by buying a conveyor belt company. The acquisition, which will cost up to 63.95m Australian dollars (£40m), helps Fenner to enhance its earnings in a fast-growing sector.

The conveyor belt specialist said its subsidiary Fenner Dunlop Conveyor Services had entered into a joint venture with Belle Banne (Victoria) and Leading Edge Conveyor Solutions, which will lead to the acquisition of the companies' entire business and assets.

Fenner, which is based in Hessle, near Hull, said the deal will increase its work in Australia and grow its presence in conveyor engineering and other services linked to the mining and industrial markets.

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Fenner chief executive Mark Abrahams said: "Belle Banne Victoria and Leading Edge Conveyor Solutions are two great companies with experienced and capable people which build on one of Fenner's core areas of expertise in the mining services sector.

"It also gives Fenner a broader market reach, including the Victorian brown coal and energy industry.

"This acquisition further reinforces Fenner Dunlop Australia's position as the leading provider of conveyor products and value added services in Australia's buoyant mining sector."

The companies, together referred to as BBV, earned pre-tax profits of 6.6m Australian dollars (4.14m) in the year to the end of June, and the deal will be earnings enhancing immediately upon acquisition.

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The transaction and joint venture will be phased in over six years with Fenner initially acquiring a controlling interest of 50.01 per cent of the joint venture, business and assets on completion. The business is being bought from family trusts.

In September, Fenner revealed that its full year results should be the top end of expectations. It reported a strong performance in the final two months of its financial year and said it was confident about its prospects for 2011. Two months ago, Mr Abrahams said Fenner's acquisitive growth programme remained "ongoing,"

After studying the September trading statement, analysts at Brewin Dolphin upgraded their 2010 and 2011 forecasts for Fenner by five per cent.