- LaserBond (ASX:LBL) signs an agreement to acquire a 40 per cent equity stake in Gateway Group, a Perth-based enterprise specialising in equipment parts and servicing
- The goal is to reach 51 per cent ownership within three years from the acquisition’s settlement date
- LaserBond’s shares were down 14 per cent after the company also released its 1H FY23 results
- Revenue from continuing operations was up 8.7 per cent from $18.65 million to $20.28 million
- LBL last traded at 76.5 cents
LaserBond (ASX:LBL) has signed an agreement to acquire a 40 per cent equity stake in Gateway Group, a Perth-based enterprise specialising in equipment parts and servicing.
The goal is to reach 51 per cent ownership within three years from the acquisition’s settlement date. Financing for the acquisition, covering Gateway Parts and Services, along with Gateway Hydraulics and Hardchrome operations, will involve a mix of cash and scrip.
“The Gateway acquisition significantly advances our aim for local facilities with local management servicing the needs of WA customers and affording them greater efficiencies with shorter lead times and closer operations.” LaserBond CEO and Executive Director Wayne Hooper said.
Business strategy
The decision to acquire is based on Gateway’s strong presence in sizeable industrial markets, complementing LaserBond’s technologies and services. Gateway Group, with effective management and a strategic focus on surface engineering, positions LaserBond strategically to tap into key sectors in Western Australia.
“The synergies between the two businesses are many, with the initial opportunity for our Services division,” Mr Hooper said.
“However, with a local presence, a strong brand and a large customer base, we’re confident that other opportunities will emerge for other areas of our business in the WA market.”
Funding for the cash portion comes from internal resources, leaving $4.8 million for additional growth initiatives.
The scrip component involves issuing new shares within annual placement limits, not requiring additional shareholder approval. The acquisition is expected to boost earnings per share in its first year.
Gateway Group’s FY23 financials results reported $32.6 million in revenue, $5.6 million EBITDA, and net assets of $15.4 million. The Enterprise Value for the transaction is 4.5 times EBITDA.
As a non-majority shareholder, LaserBond will equity account for its share until reaching the agreed-upon 51 per cent ownership level, three years from the initial settlement date.
Despite the expansion news, LaserBond’s shares were down 14 per cent after the company also released its 1H FY23 results.
Although the company reported revenue from continuing operations was up 8.7 per cent from $18.65 million to $20.28 million. All other earnings reported losses, EBITDA Down 9.1 per cent from $4.62 million to $4.20 million. Net Profit Before Tax Down 21.1 per cent from $2.74 million to $2.16 million. Net Profit After Tax Down 15.6 per cent from $2.00 million to $1.69 million
LBL last traded at 76.5 cents.