Why the NRW (ASX:NWH) share price is on watch

The NRW Holdings Limited (ASX:NWH) share price is one to watch after an update on the company’s Primero Group Ltd (ASX:PGX) acquisition.

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The NRW Holdings Limited (ASX: NWH) share price is on watch after an acquisition update from the Aussie mining services group.

Why is the NRW share price on watch?

NRW announced that it has completed the compulsory acquisition of outstanding Primero Group Ltd (ASX: PGX) shares. That means the diversified Aussie mining and construction services group now owns 100% of Primero shares.

It follows NRW’s 24 November 2020 announcement about its $100 million offer for Primero. Primero is a vertically integrated engineering group operating on global resource projects across Australia and North America.

Under the terms of the offer, Primero shareholders received 27.5 cents cash plus 0.106 NRW shares for each Primero share. The NRW share price has been under pressure in recent months including a 33% decline in 2021.

Last night’s compulsory acquisition update follows a February update on the process. NRW was trying to entice Primero shareholders who were holding out on the deal with accelerated payment terms. That meant those who accepted the terms prior to compulsory acquisition would be paid within 10 days of valid acceptances.

Shares in the mining and construction services provider fell 16% in one day. That happened on 16 February after the group’s half-year results for 1H 2021. NRW reported a 44% increase in revenue to $1.168 billion and a 28% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to $132.8 million.

However, the NRW share price fell as profits slumped lower. Net profit after tax and before amortisation and other items fell 12% to $40.3 million.

Foolish takeaway

Yesterday’s announcement effectively brings to a close this chapter of NRW’s latest takeover. The NRW share price will be worth watching in today’s trade after the company successfully moved to acquire 100% of Primero shares on offer.

The Aussie mining and construction services group has been under pressure in 2021 and is underperforming the S&P/ASX 200 Index (ASX: XJO).

NRW closed Wednesday’s session with a $903 million market capitalisation and a 12.4 price-to-earnings (P/E) ratio.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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