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$205m acquisition boosts Orica Ltd’s share price growth potential

share price boom Orica upgrade

Shares of explosives maker Orica Ltd (ASX: ORI) are up this morning on the $205m acquisition of GroundProbe.

GroundProbe is a global market leader in the provision of critical monitoring and measurement technologies for the mining sector. The business looks a great fit with Orica’s existing Nitro Consult and Blast IQ businesses.

On the accompanying press release CEO Alberto Calderon highlighted the growing importance of digitally enabled blasting and monitoring solutions, both in mining and large scale civil work.

The GroundProbe deal is all cash and is expected to be earnings enhancing over a full years ownership.

Foolish takeaway

I first recommended Orica in late October on the basis of its market leading position globally, and the scope for improvement in its markets in 2018/9. After a period of share price weakness from $20 down to $16, the shares can now be bought for $18. That looks even better value following the GroundProbe deal.

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Motley Fool contributor James Middleweek has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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