Stocks To Watch

Wednesday,17 September,2014

Gemini Corporation Acquiring Muskeg Environmental Consulting

2014 has been packed full of mega mergers, but this week has actually been a little change of pace with news of amalgamations slowing down a bit. Microsoft has made the biggest splash, saying on Monday that it is spending $2.5 billion to buy Mojang AB, the software company behind the insanely popular game Minecraft.

In the small cap space, Calgary-based professional energy service company Gemini Corporation (TSX-Venture:GKX) said on Wednesday that it is acquiring Muskeg Environmental Consulting Ltd., an environmental consulting firm servicing oil and gas clients in northeastern British Columbia, as Gemini aims to expand its services and geographic footprint in Western Canada.

Muskeg employs more than 30 people in its office located in Fort St. John, British Columbia, specializing in environmental, remediation and reclamation services.

Financial terms of the transaction were not disclosed, nor have the terms been finalized, although Gemini intends to fund the acquisition through a combination of cash and shares. The acquisition is expected to close in early October.

Gemini says increasing regulation across the oil and gas industry has created a high growth opportunity for companies that have the scope of offerings to expedite the regulatory approval process. The company’s diversified services include land, environmental, regulatory, engineering, fabrication, installation and maintenance solutions. Gemini also provides a value to customers with its integrated design-build project delivery model.

The acquisition of Muskeg complements the existing Gemini business and brings a new client base to Gemini. The company also sees an expansion opportunity by bolstering its service offering at the front end of projects, which should shepherd growth for its engineering and field service business units.

"The growth opportunities for both our business and our personnel are important factors in making this investment. The expertise and experience of the professionals in each of our organizations are what will make this combination a success,” stated Doug Lautermilch, Gemini's President and CEO, in a statement today.

The new client portfolio should help continue to grow the top line at Gemini, which posted a strong first quarter this year. In the January to March period, revenue totaled $24.22 million, a 63% jump from $17.35 million in Q1 2013. Net loss was trimmed to $171,000, or three cents per share, from $370,000, or seven cents per share, in the year-prior quarter.

Still, though, the stock has fallen significantly from a high in April at $1.15 to a low of 56 cents hit on Tuesday. Investors aren’t responding much to the acquisition news, with the stock climbing only 1.8% to 57 cents on minimal volume of 5,500 shares as the day winds to a close.

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