The acquisition of Nova, in my mind is only OK. I think 8x EBITDA is getting on the expensive side. The key is as you say the possibility of expanding with any acquired licences not currently held. Time will tell on this front.
I notice they have increased their debt facility to $90m, and have indicated the purchase of Nova to be made through operating cash and debt I believe. Given cash from operations declined substantially last year (and I'm expecting similar or worse this year), their debt increased to $9m, and $32m cash reserve was used basically to pay the dividend, I think a bit of a cash squeeze may be present this year. Especially given that the USA facility is still being constructed.
I will be keeping a close eye on the debt levels over the next two reporting periods.
The acquisition of Nova, in my mind is only OK. I think 8x...
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