07 January 2021
CM Industrial By CM Industrial

DSI Underground and Sandvik: A Perfect Match?

We’ve only just kicked off 2021 and already the ground support market is hitting the headlines with major M&A news.

Swedish engineering specialist Sandvik has agreed to acquire DSI Underground, the global leader in ground support and reinforcement products, systems and solutions for the underground mining and tunnelling industries.

The deal is valued at €943m ($1.15bn) on a cash and debt-free basis and will strengthen Sandvik’s status as a market leader for mining products and solutions.

A sales and purchase agreement has been signed with Triton (the investment company making the sale) and the transaction is expected to close subject to local review, protocols and regulatory approvals by mid-2021.

What Does This Merger Mean?

DSI Underground and Sandvik Mining and Rock Solutions occupy similar spheres as providers of equipment, services and solutions to the mining and tunnelling industries.

When the acquisition is complete, Sandvik will have the widest range of mining products and solutions globally. It will be strengthened by DSI’s array of ground support systems which includes its pumpable injection chemicals, resin capsules, galvanised mesh and dynamic anchor systems for underground mining.

In terms of delivering full turnkey solutions within the mining industry, the addition of DSI ground control products will be complementary to Sandviks current range. So, the deal will come as welcome news to customers of both Sandvik and DSI Underground.

The deal will also significantly strengthen Sandvik’s global sales footprint. DSI is present in 70 countries, with 22 production units situated close to end customers.

DSI has a long list of competitors including MBCC, Normet, Minova, Mapei UTT, De Neef, Sika and more. All of them will be watching this deal closely, which is set to create strengthened competition. The same goes for competitors of Sandvik including Epiroc, Komatsu, Metso, Caterpillar.

A Possible Stumbling Block

It’s not all sunshine and roses. The uncertainty that surrounds a merger needs addressing. In an extremely competitive talent market, both companies will need to provide security and stability for their employees to avoid losing them to competitors. DSI Underground employs over 2,000 people who will all need reassurance about their futures – sooner rather than later.

Despite this possible stumbling block, the deal is a positive start to 2021 for both DSI and Sandvik.

It is yet another example of the Swedish companies’ strategy to invest in strong businesses with good growth potential, having previously acquired global market leader in software for numerical control simulation, verification and optimization; CGTech.

Should the deal go through, the DSI business is well-placed for growth and I’m excited to see what advancements this new partnership brings.

If you’d like to have a chat about this news or anything related with the ground support market, please give me an email at Mike.Walsh@industrial-cm.com.

You can find more content like this on my consultant page.

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