Computershare Limited surges on $560 million acquisition

Here's what you need to know about the deal that set Computershare Limited (ASX: CPU) on a new 52-week high.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Computershare. 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 Scott Phillips.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »