Ann: Becoming a substantial holder, page-6

A most interesting development relevant to RUL is the recently announced acquisition of RUL peer Deswik by Sandvik.

Swedish multinational Sandvik has a market cap of close to A$50bn. Deswik will form part of its new 'Digital Mining Technologies' division. The release didn't explicitly discuss acquisition price, but it did note Deswik delivered revenue of A$79m in the 12 months to Oct 2021, 45% of which is recurring in nature, at 30% EBITA margin.

I understand Sandvik subsequently said the EBITDA multiple was 28x to 32x, implying a ~A$700m purchase price.

The above implies a substantially higher price tag for RUL (when compared with its current market price). This comes at a time when I think we'll start seeing especially strong earnings growth for the company. FY22 is shaping up to be a cracker for RUL.