The Coventry Group Ltd (ASX: CYG) share price is in focus this morning, after news of an acquisition. The supplier of industrial solutions has agreed to purchase Fluid Power Services Pty Ltd (FPS).
The Coventry Group share price closed at $1.16 yesterday and has remained flat in early trade so far.
Let's look closer at the news Coventry released this morning.
New acquisition
Coventry Group is set to acquire Fluid Power Services, a Tasmania based provider of specialised hydraulic equipment.
It stated the acquisition will allow create a Tasmanian branch of the company's Fluid Systems division.
FPS is said to be a leading provider of hydraulic products and engineering solutions in Tasmania. It has a diverse customer base and strategic supplier alliances with Rexroth and Hydac.
Coventry Group will purchase the Tasmanian company for $2.1 million, which it will pay in cash. The ability for a cash transaction comes from the group's new financing facility with NAB, which it announced last week.
The release from Coventry Group stated FPS has had a total revenue of $4.9 million in the 2020 financial year. It also has an adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $1.2 million.
The acquisition is planned to be finalised late this month. Although, Coventry Group has stated in the case of material adverse change, it may not go through with the acquisition.
Commentary from management
Coventry's managing director and CEO Robert Bulluss said Coventry is pleased to welcome FPS to the group.
FPS is a well-run business that has delivered sales and earnings growth over an extended period. The business is highly complementary to our Fluid Systems business, further diversifying into non-mining markets and providing geographical coverage in Tasmania. FPS represents another compelling acquisition opportunity that is consistent with Coventry Group's growth strategy and satisfies Coventry Group's key acquisition criteria.
Coventry Group share price snapshot
The Coventry Group share price has had a good performance on the ASX lately. The group's share price has risen by 17.6% year to date and is also up by 142.7% over the last 12 months
Coventry Group has a market capitalisation of around $104 million, with approximately 90 million shares outstanding.
