Dunedin niche engineering company Scott Technology started today more than $40 million better off than on Wednesday, with the conclusion of the JBS Australia takeover.
"Tomorrow could be counted as ‘day one' for Scott,'' managing director Chris Hopkins quipped at a staff meeting yesterday on the future of the 102-year-old Dunedin company.
Scott is debt-free today, having paid off $16.6 million debt in recent days, and with cash in hand totalling about $25 million is eyeing up doubling its work space in Kaikorai Valley, growth that could also involve increasing jobs from the current 70.
JBS Australia, a subsidiary of Brazilian global food giant JBS, yesterday formally completed its takeover of Scott, Scott informing the NZX of the conclusion of the scheme of arrangement and JBS Australia management having a meeting with Scott's board.
JBS Australia chief executive Brent Eastwood said after the meeting the expectation was for Scott to use the added scale and new capital to expand, whether in niche engineering, agriculture, robotics or mining sectors.
"That's up to Scott, how they expand. The No1 focus for Scott is to get its best return for [all] shareholders,'' he said.
Mr Eastwood reiterated earlier statements that Scott would remain headquartered in Dunedin and JBS had no intention of restructuring or increasing its 50.1% stake.
"The challenge for Scott now is to use the [$25 million] capital - it's no good to anyone in the bank,'' he said.
He said JBS had no specific projects it would steer towards Scott and no plans for any further capital injections.
However, if a design project suited some of JBS's 300 global food and meat-processing plants, it would offer a suggestion to Scott's project steering committee for consideration.
Scott at present has a five-person board and Mr Eastwood said JBS would shortly get representation "proportional'' to its 50.1% stake.
He later told about 60 staff at a luncheon there was "no way'' there would be any preferential treatment for JBS, compared with JBS competitors, and all inter-company transactions would be transparent under "related party'' public disclosures.
Scott chairman Stuart McLauchlan said the company had achieved two of three goals set in recent years: it had hit a market capitalisation of more than $100 million ($122.5 million yesterday), and he was "hoping'' to surpass turnover of more than $100 million this financial year.
On the third goal of hitting $10 million annual after-tax profit, Mr McLauchlan noted he could not announce financial guidance through the media.
Scott managing director Chris Hopkins said the relatively new Kaikorai Valley site had been designed to be double its existing size, and "that's potentially where we're headed''.
Asked if that meant a doubling of its current 70 staff, Mr Hopkins said staff numbers could increase, but outsourcing of component work from Dunedin suppliers would continue.
Mr Hopkins did not believe there would be any surprises in the type of work or acquisitions Scott might make in the near future.
It would continue in automation and robotics, mining and agriculture.
Last month, Scott announced it was negotiating to buy a competing 40-employee German engineering company, which has annual turnover of more than $13 million.
Mr Eastwood sees robotics as a huge growth sector, especially in repetitive high-risk jobs such as in abattoirs or the mining sector.
The former is an area where Scott is already in a successful joint venture with Silver Fern Farms developing and selling robotics.
On the question of robots displacing the human workforce, he said JBS had reallocated skilled staff to other, safer, positions in its plants.
Scott now has 74.6 million shares on issue, of which JBS's 50.1% stake represents 37.4 million shares.
Existing shareholders who opted to take part in a rights issue raised $2.74 million for Scott.
