DDH1 and Perenti are joining forces to create the ASX’s largest mining services stock

Nick Sundich Nick Sundich, June 26, 2023

After just over two years on the bourse, DDH1 (ASX:DDH) is merging with fellow ASX mining stock Perenti (ASX:PRN) in a $410m deal.

 

SIGN UP FOR THE STOCKS DOWN UNDER NEWSLETTER NOW!

 

DDH1 bought out for less than it listed for

What’s not to like about this deal? Shareholders will get A$0.1238 per share and 0.7111 new Perenti shares for each DDH1 share held. The deal is a 17.4% premium to the last traded price and values DDH1 at $410m and will leave their shareholders owning 29% of the combined business.

Well, it is a discount to the $1.10 price it listed at back in March 2021. The company listed at a boom time for the resources sector, particularly the iron ore sector. Western Australia’s closed borders ensured that it could operate as usual throughout the pandemic.

But it was unable to stand out from its peers, in spite of a solid FY22 and being a payer of dividends. But FY23, particularly the second half was more difficult due to wet weather, approval delays and program deferrals given the latter two reasons.

 

DDH1 (ASX:DDH) share price chart, log scale (Source: TradingView)

 

Shareholders may be better off together with Perenti

It has been only 3 weeks since Perenti last updated its guidance. It is expecting $2.9bn in revenue and EBIT(A) of $260-$265m and expecting growing margins in FY24 and FY25.

Potentially, the merger could boost Perenti further. However, DDH1 shareholders would be forgiven for being skeptical given DDH1 undertook acquisitions of its own during its tenure and there was a lack of share price growth thereafter.

 

Stocks Down Under Concierge is here to help you pick winning stocks!

The team at Stocks Down Under have been in the markets since the mid-90s and we have gone through many ups and downs. We have written about every sector!

Our Concierge BUY and SELL service picks the best stocks on ASX. We won’t just tell you what to buy – we give you a buy range, price target, a stop loss level in order to maximise total returns and (of course) we tell you when to sell. And we will only recommend very high conviction stocks where substantial due diligence has been conducted.

Our performance is well ahead of the ASX200 and All Ords.

You can try out Concierge for 3 monthsfor FREE.

 

GET A 3-MONTH FREE TRIAL TO CONCIERGE TODAY

 

There’s no credit card needed – the trial expires automatically.

 

Recent Posts

johns lyng group

Johns Lyng Group (ASX:JLG): One of a few ways to profit from climate change

Johns Lyng Group (ASX:JLG) is a restoration services company, repairing properties after damage by insured events, including weather and other…

hydrogen in australia

Hydrogen in Australia: Can we expect massive adoption in the next 10 years?

When will we see hydrogen in Australia? Not as a fad, not as an idea, but as a widespread energy…

Why is Gina Rinehart buying into Lynas

Why is Gina Rinehart buying into Lynas? She’s accumulated a stake worth over $300m

The big question on many investors’ minds this week is why is Gina Rinehart buying into Lynas? A substantial notice…