SYDNEY, Nov 17 (Reuters) - Australian heavy engineering firm Civmec Ltd CIVM.SI said it plans to buy the shipbuilding assets of domestic rival Forgacs Engineering Pty Ltd, aiming to benefit from an expected rush of government defence contracts.
Australia's naval shipbuilding industry is squaring up against large global competitors for some A$89 billion ($63 billion) in defence building contracts promised by the government over the next 20 years.
A source familiar with the deal said the unit generates about 60 percent of Forgacs' annual revenue of A$120 million ($85 million). The source declined to be identified as terms of the deal were not disclosed by the companies.
"This is a very exciting opportunity for our company to extend our multi-disciplinary operations to the east coast of Australia and to gain a long established foothold in the defence shipbuilding industry," Civmec Chief Executive Officer Pat Tallon said in a statement.
Forgacs Chairman Peter Burgess said the deal would strengthen his company's balance sheet. Forgacs shareholders are expected to receive a stake in Civmec as part of the deal, he added.
The deal is also part of consolidation sweeping through Australia's heavy engineering sector as companies seek new ways to make money following the end of a two-decade mining boom. Civmec's Singapore-listed shares are down 43 percent so far this year, giving it a market value of around $144 million. ($1 = 1.4112 Australian dollars)