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Computershare Limited surges on $560 million acquisition

Transfer agency and share registration company Computershare Limited (ASX: CPU) announced the acquisition of Equatex, a leading European employee share plan administration business, for €355 million (circa AU$560 million).

Equatex has over 160 corporate clients, distributed across diverse geographies and industry sectors. The company has about US$400 billion of assets under administration, servicing over 1 million share plan participants – a 10% share of the European market.

The deal fits within Computershare’s multi-year strategy of growing its employee share plan segment through accretive acquisitions and provides a base for tapping into new EMEA markets.

In the last four years, Equatex’s revenue grew at a compound annual growth rate of 4%, with an underlying EBITDA margin of 28% in CY17. Revenue consists of both issuer paid fees and participant paid transactional fees, with a strong cash flow generation that is expected to contribute to Computershare’s cash position.

The transaction will be marginally EPS accretive in FY19, but it’s estimated it will disclose cost synergies of US$30 million per annum over the course of three years versus one-off integration costs of US$47 million.

The regulatory approvals necessary to complete the transaction are expected within six months.

Following the announcement, the Computershare stock price climbed 3% higher to a 52-week high of $18.40.

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