Ann: GUD acquires Disc Brakes Australia, page-2

So they've paid $20m for something currently generating sales of $20m and EBIT, i.e., an EBIT margin of 15%.

This compares to GUD's Automotive division's EBIT margins of 29%, so even if GUD gets the EBIT margin of this acquired business, to just half way between 15% and 29%, i.e., to a conservative 22%, that would imply EBIT of around $4.5m.

So, GUD has effectively acquired this 40-year old business on an EBIT multiple of less than 4.5x (and probably less than 4.0x on a FY2019 prospective basis).

Put another way, they've allocated capital equivalent to some 1.5% of the company's current Enterprise Value, which will have the effect of increasing EBIT by 4.5% (based on FY2019's EBIT of around $98m, before incorporating this acquisition).

You just need two of those sorts of transactions per year, and it translates into a meaningful supplement to the existing organic growth, rendering double-digit growth in underlying earnings for the Group... with quite limited execution risk.

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