Palladium sells majority stake for $224M

The owners of Palladium, the international development infrastructure group, have sold a controlling share of the business to Global Infrastructure Solutions Inc., a U.S. company that owns a stable of infrastructure organizations. According to a filing with the U.S. Securities and Exchange Commission, GISI will pay over $224 million in cash, as well as offering 6% of its own shares, for an effective 80% share of Palladium, which it will own through a holding company. Palladium launched in Australia in 1965 as an agriculture business but expanded rapidly into international development. It was acquired from a previous owner in a management buyout in 2009 and now has around 2,500 employees operating in 90 countries. The deal values Palladium at approximately 435 million to 452 million Australian dollars, equivalent to roughly $307 million to $319 million. Prior to the acquisition, the majority of Palladium shares were held by Chairman Kim Bredhauer, who owned 38% of the business, and CEO Christopher Hirst, who owned 18.4%. At a price of $51.13 per share, Bredhauer is likely to make around $85 million and Hirst around $41 million. Hirst said he does not expect the acquisition to have any impact on the programs that Palladium delivers, and there will be no dismissals or changes at the senior management level. He said that Palladium had sold in part because the previous structure did not allow the company to take on finance to expand nor allow employee owners to easily sell their stake. “We’ve been looking at this for six or seven years,” Hirst told Devex. “Since a small group of staff did a management buyout, we’ve been running various processes to allow more and more staff to become equity investors in Palladium. We think it’s important for staff to have a stake in the service they’re delivering, and we’ve been very successful over that period of time. But the shareholders don’t have a pot of money we can go to when we need extra equity. So we’ve been looking for a cornerstone investor who can bring in more capital and help staff exit as they need to.” Rick Newman, president and CEO of the employee-owned GISI, said Palladium’s skills in “social infrastructure” made the acquisition attractive. “We’re all coming to realize that real, lasting positive impact takes more than physical infrastructure,” he said. “We need a partner with expertise in social infrastructure — the ability to design and implement complex social and economic development programs anywhere in the world.”