Precision welding firm K-Tig is buying a UK nuclear industry supplier

Adelaide-based precision welding company K-Tig will buy UK nuclear industry supplier Graham Engineering for more than $30m.

K-TIG managing director Adrian Smith. Picture: supplied by K-TIG

Adelaide-based precision welding company K-Tig will buy UK-based nuclear industry supplier Graham Engineering in a deal worth potentially more than $32m.

K-Tig, which was originally spun out of the federal government’s industrial research agency CSIRO, will pay up to £17.55m for Graham, which has clients including Rolls Royce, Siemens, and the UK Atomic Energy Agency.

The UK company is a specialist manufacturer of highly-engineered, large-scale metal fabrications - such as vessels to contain nuclear waste - for the UK’s nuclear decommissioning industry.

It also has customers in the aerospace, medical and security sectors.

K-Tig, which specialises in precision welding and which has developed a process which can weld materials faster and at a higher quality than other processes, has been building up its capabilities in the nuclear and defence sectors recently.

In the past year it has been awarded funding for a research project under the US government’s National Shipbuilding Research Program, and also signed a memorandum of understanding with another UK-based firm, Drachem Engineering to collaborate on a contract to construct intermediate-level nuclear waste storage containers.

K-Tig’s Australian Securities Exchange-listed shares are currently in a trading halt, with the company, headed by managing director Adrian Smith, looking to raise $20m from the issue of new shares to fund the deal.

“On completion of the acquisition, Graham Engineering will become a wholly-owned subsidiary of the company, and the company’s main undertaking will be specialist manufacturing in the nuclear decommissioning industry,’’ K-Tig told the ASX in a statement earlier this year.

“Graham Engineering have been supplying the nuclear sector since 1985 and have extensive experience in the manufacture of containments of all varieties, plant and equipment.’’

The deal will have to be approved under the UK Government’s National Security and Investment Act, as well as being approved by K-Tig shareholders.

Under the deal, K-Tig will make an upfront cash payment of £10m, pay £4.55m for the company’s freehold property and will pay a deferred cash payment of up to $3m depending on future earnings.

In all, the deal is worth slightly more than $32m in local currency.

Graham Engineering was founded in 1970 and now employs more than 180 people.

K-Tig’s technology is up 100 times faster than traditional TIG welding, and can fully-penetrate metals up to 16mm thick in a single pass, and typically operates at twice the speed of plasma welding, the company said in its most recent half-year report to the ASX.

“K-Tig remains focused on accelerating its strategic pillars, including enhancing its presence in the US, UK and European markets, advancing K-Tig’s technology in the multi-billion dollar defence and nuclear industries and undertaking R & D, in-house and in conjunction with innovative customers to develop welding solutions for other metals such as aluminium, other exotics and other highly-specialised industries,’’ the company said.