The Environmental Group (ASX: EGL) has taken a strategic decision to acquire Australian industrial boiler service and manufacturing business Advanced Boilers & Combustion for $5.5 million.

The engineering company said it expects the new business to provide a major expansion to its sales and service offering to the industrial boiler industry while complementing its existing operations.

The company will fund the acquisition, which it anticipates completing by early April, from its existing cash resources.

Fabrication expertise

The Environmental Group said the Advanced acquisition would broaden the company’s current capability by adding expertise in fabrication, boiler fit-out, economisers, pipe welding, skid manufacture and control panels.

Advanced reported FY24 revenue of $16m, with approximately 60% of that coming from service business.

Advanced’s former owners will remain actively engaged in the business in key roles post-acquisition.

Leading boiler supplier

Advanced is the second-largest boiler supplier in Australia, holding an approximate 8% market share with operations in Victoria, New South Wales and Queensland.

Established in 2006, it owns the exclusive rights in Australia to manufacture and sell Maxitherm boilers—one of the top two leading water tube boilers in the country.

The Environmental Group sees Maxitherm as particularly relevant to larger industrial uses, offering excellent synergies with its existing range of boilers.

Funding arrangements

The company has obtained a temporary $3m increase in its Westpac overdraft facility until 30 September 2025.

It has also arranged for a permanent $1.5m increase in its bond facility with the same institution to provide additional working capital and funding flexibility for future growth, investments or acquisitions.

The Environmental Group has five business units supporting client environmental operations by improving air quality, reducing carbon emissions, enhancing waste treatment and lifting water quality.