In morning trade the Propel Funeral Partners Ltd (ASX: PFP) share price is pushing higher after a favourable ACCC decision.
At the time of writing the funeral company’s shares are up 2% to $3.05.
Why is the Propel share price pushing higher?
This morning the ACCC advised that it would not oppose Propel’s proposed acquisition of Gregson & Weight Funeral Directors.
Both Propel and Gregson & Weight operate funeral director businesses and offer cremation services in the Sunshine Coast.
However, the ACCC has determined the proposed acquisition would be unlikely to result in a substantial reduction in competition in the supply of funeral director services in the Sunshine Coast region.
ACCC Commissioner Stephen Ridgeway said: “Propel and Gregson & Weight predominantly focus on different customer segments and there is limited current competition between them.”
“Gregson & Weight currently has the majority of the market and is the clear market leader in the Sunshine Coast region, while Propel has a small presence. We don’t believe the market will be significantly altered as a result of the acquisition,” he added.
Though, the ACCC notes there are concerns regarding a trend for bigger players to make small acquisitions of funeral homes, crematoriums, and cemeteries.
As this is an industry where consumers can be particularly vulnerable, the ACCC intends to continue investigating acquisitions and consolidation closely.
This could be a sign that it will be a touch harder for Propel and InvoCare Limited (ASX: IVC) to make bolt on acquisitions like these in the future.
This morning Propel welcomed the ACCC’s decision to not oppose its proposed acquisition.
The company’s head of mergers and acquisitions, Fraser Henderson, said: “With all conditions precedent relating to the Gregson & Weight acquisition now satisfied, we will work with the Gregson family to complete the transaction expeditiously.”
It intends to issue an ASX announcement confirming settlement of the acquisition once completion has occurred.
If successful, the addition of Gregson & Weight is expected to increase Propel’s annualised revenue by ~11%.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended InvoCare Limited and Propel Funeral Partners Ltd. 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.