SDS said it would pay $1.2 million cash and issue $1.16 million worth of shares in SDS Corporation at a price to be determined on the day of the settlement. The deal includes $1m for Fox’s freehold premises.

K.H. Fox is a specialised manufacturer of drilling components including geo-technical and wireline core barrels, casing, drill pipes and other accessories and has annual revenues of $1 million.

The business was first established in 1956, employs nine people and is based in New South Wales. It currently supplies to customers in Australia, Asia and Africa. A company statement said the two principals of the business, Kevin Fox and Leonard Timmins, would continue with the company.

SDS Corporation’s chief executive officer, Christian Lange, said K.H. Fox meets SDS’s growth strategy of acquiring businesses that complement existing operations, and expands the range of products that can be supplied to customers.

“This is an excellent strategic fit for SDS and allows us to offer our customers a broader range of complementary drilling products. K.H. Fox also brings to SDS a new customer base, which will allow us to cross-sell existing products.

“The acquisition is another step in positioning SDS as an emerging leader in the design, manufacture and supply of percussion and diamond drilling equipment and ancillary products to customers in the resources sector.

“Customers recognise that we are able to provide a one-stop-shop for the supply and service of all their drilling requirements and consumables.

“Meanwhile SDS remains on track to meet its 2004 earnings forecasts. Further, this proposed acquisition, and the recently announced purchase of Canadian drilling component manufacturer Manley Steels, positions us well for a stronger earnings performance in 2005,” Lange said.