ASX-listed Service Stream has agreed a $310 million deal to...

ASX-listed Service Stream has agreed a $310 million deal to acquire Lendlease’s services business.

The company will fund its offer with a $185 million equity raising underwritten by Ord Minnett. The broker started arranging investors to tip into the deal on Wednesday morning.
The deal was struck at five-times earnings, on an enterprise value to EBITDA basis post synergies.
Service Stream is expected to tell investors the acquisition will be 30 per cent accretive in the 2022 financial year, on an EPSa basis.
It represents a long-awaited end of an era for Lendlease, which has spent the past two years readying its services unit for sale. Its services is a maintenance and asset management contractor that looks after airports, roads, wind farms and the like.

Lendlease had Morgan Stanley and Gresham shopping the business to potential buyers more than 18 months ago, before putting it on hold when the pandemic hit last year. The bankers re-started the auction in May.
It’s a big deal, and a big equity raising, for Service Stream.
The raising was split into a $123 million rights issue and $62 million placement at 90c a share. The rights issue was a one-for-three entitlement offer.
The deal was at a 6.2 per cent discount to the last close.
“The gross amount raised under the Offer will be used to partly fund the acquisition of Lendlease Services, a non-core business segment within the Lendlease Group,” the term sheet sent to potential investors said.
Ord Minnett, which was named as sole lead manager and underwriter, was calling for bids into the placement by 5pm on Wednesday.



IMO coughing up 90c seems like not too much of a burden to nearly double the business