The Saxum Rock Tools take over cost SDS $1.8 million, however the company believes the Manley Steels merger will result in immediate cost savings gained by reducing premises costs, and operating one back office function incorporating accounts, IT and other administrative tasks. The new business will also have greater purchasing power of raw materials, resulting in further savings in the manufacturing process.

SDS will operate the combined operation out of Manley’s facility, and has forecast annual revenue of $10 million, with the facility large enough to generate in excess of $25 million in revenue per annum.

Drilling consumables manufacturer Saxum currently generates annual revenues of $5 million and sells its products through distributors and direct to customers in North and South America, the Middle East and Europe. The acquisition will be funded by a cash payment of $0.9 million and the issue of approximately 1.18 million SDS shares.

“These acquisitions fit with the SDS’s strategy of acquiring businesses that complement existing products and services, as well as realising significant cost savings through successful integration. We have already commenced integration planning, and initial cost savings are estimated to be $1 million on an annualised basis. We expect that both businesses will be fully integrated operationally by October 2004,” said SDS CEO Christian Lange.

“The combined Saxum and Manley businesses give SDS more critical mass in key international markets, and gives the group a competitive advantage in securing a greater share of the drilling consumables market. Saxum’s and Manley’s products complement each other, giving new and existing customers a more comprehensive product and service solution.”