The story behind IMDEX’s acquisition of Devico

March, 2023

Leading global mining-tech company IMDEX Limited has completed the acquisition of Devico, a world leader in directional core-drilling solutions. The conclusion of the USD 334 million deal was announced March 1, 2023.

‘The combination of our two businesses is clearly on strategy for three key reasons: Firstly, it delivers us the leading market position in Europe. Secondly, it consolidates our leading market position globally and adds the leading directional drilling technology in the market. Ad finally it provides a world-class team and facility in the Scandinavian region. We are very pleased to welcome the Devico team,’ commented Paul House, Imdex CEO.

With a market capitalization of more than $1 billion, Imdex has come a long way since its establishment in 1985, growing its business organically and through mergers and acquisitions. When in 2022 Paul House and his team started running the ruler over companies globally that were operating in what Imdex considered its core business – providing the tools and technology to enable clients to find, define and mine orebodies with precision and at speed, it was Devico that came first on their list.

Devico was founded in 1988 by Viktor Tokle and his wife Bodil in the Norwegian town of Trondheim. The couple and their team first worked from their garage but had a clear vision:  to be a world leader in directional core drilling, borehole surveying and accompanying software. It took them 35 years to fulfill that vision and become a global leader.

Today, the Devico Group comprises 21 companies in 15 countries and has about 200 employees. It is the number one global provider of directional drilling services in mineral exploration, the number two provider of borehole surveying solutions in the same sector and is regarded internationally as a leading supplier to the civil construction industry. The business has demonstrated its ability to scale over the last three years with revenue CAGR of 17% per year.

While Tokle and his family remained the majority owners of Devico, ill health forced Tokle relinquish day-to-day control of the business in about 2013. Eventually, considering the size of the company and complexity of its operations, Devico felt the time was right to find another owner. And IMDEX came into the picture.

Apart from the clear synergies between the two companies, IMDEX knew that, while they had the inhouse expertise to develop tools and technology to match those of Devico, they were facing multi-year testing and development timeframes, in some cases up to 10 years to match Devico’s existing European market reach.

What IMDEX did not realise as they conducted their due diligence, was that Devico was already in discussions with potential suitors.

House said: ‘We went looking for Devico. We conducted a very in-depth assessment of all the players in what we would describe as our core business. There were some dozen targets that we have watched and continue to watch. There are many fine companies, both established and emerging that have caught our interest, but we had to start with those closest to our core business – Krux was one of these and Devico was the other.’

Paul House, Chief Executive Officer of IMDEX

‘I reached out to the Chairman and CEO in Norway and requested a meeting. We flew over there. We were very clear that we thought that a combination of their business and our business would be extremely compelling.’

‘We outlined why the jewel in the crown was their Scandinavian facilities, the complementary nature of the businesses, the number-one leadership position of their directional drilling technologies and the complementary nature of their rock knowledge technologies, and their client footprint made a tie-up seem right.’

House and the team left what they thought had been an excellent meeting.

But along with being unaware that Devico had already put out the For Sale sign, House did not know that the fallout from IMDEX’s acquisition of the Swedish based REFLEX Group in 2006 had left deep business scars in Scandinavia.

When the REFLEX deal was done, IMDEX closed the head office in Sweden.

In a follow up phone call IMDEX learnt that Devico had already started a process for sale and had deliberately chosen not to include IMDEX.

‘They thanked us for coming to visit them and said we had originally not invited IMDEX to participate partly because of our competitive position, but also because when IMDEX acquired REFLEX in Sweden, it had closed the head office there and they did not want that to happen to their team and their facilities in Norway,’ House said.

‘However, they said that with time to consider the approach and after some internal discussions, and because of the way we had emphasised that their European headquarters and footprint was the jewel in the crown and that we valued it strategically, they had decided to invite us in to that process.’

‘So, it was very fortuitous that we’ve been active and that we took the approach we did in assessing Devico and contacting them directly or we would have been left outside of the process,’ House said.

The retention of a strong Devico management team, with key personnel reinvesting a portion of their proceeds of the acquisition into IMDEX shares, is a feature of the $334 million transaction.

Commenting after the deal, Tokle said: ‘As Devico becomes a part of IMDEX, this combination will certainly be the powerhouse within the industry. The product offering and the global presence is unique.’

And in a letter to staff and clients, after the acquisition was announced, Olso said: ‘Our companies complement each other, both geographically, and with products and services. Together we will be the undisputed number one technology company of its kind in the world.’

You can read the company’s announcement here: