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Downer finds Otraco buyer in Bridgestone

Downer finds Otraco buyer in Bridgestone
Downer is set to move further away from the mining services sector by selling tyre management business Otraco to Bridgestone for $79 million.
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The agreement is expected to occur this year, and once completed will see around 860 Otraco employees, sales offices and training facilities come under the Bridgestone’s ownership.

The acquisition is anticipated to expand Bridgestone’s service network in Australia, Chile and South Africa.

Downer chief executive Grant Fenn said the sale followed Downer’s exit from its underground mining, open cut Mining West, Downer Blasting Services and Snowden consulting businesses, along with its share in the RTL Mining and Earthworks joint venture.

“We remain in active discussions with a number of interested parties in relation to the open cut Mining East business,” he said.

Bridgestone global chief operating officer and representative executive officer Masahiro Higashi said acquiring Otraco would allow the company to quickly create growth opportunities with existing mining customers.

“Otraco has an extensive service network built on strong customer relationships and we are excited for their team of experts to join Bridgestone,” Higashi said.

Otraco has built a 45-year history in delivering off-the-road and light mobile equipment tyre management solutions to the global mining sector, changing more than 50,000 earthmover tyres annually.

Its operations in Western Australia include Rio Tinto’s West Angelas and Yandicoogina iron ore mines as well as Fortescue Metals Group’s Cloudbreak and Christmas Creek iron ore operations.

In the eastern region, Otraco has delivered services to BHP’s Mt Arthur thermal coal mine (Queensland) and Newcrest Mining’s Cadia gold mine in (New South Wales).

Downer’s sale of mining and laundries assets to date, including Otraco, has generated $605 million in proceeds.

Downer intends to focus on its core urban services businesses, comprising transport, utilities, facilities and asset services.

The company noted their core businesses’ market leading positions, high proportion of government-related contracts, lower business risks and more predictable revenues.

The businesses have $36.2 billion worth of projects as of February this year.

The Otraco transaction is subject to conditions and regulatory approvals.


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