Why the Coventry Group (ASX:CYG) share price is in focus today

The Coventry Group Ltd (ASX: CYG) share price could see movement today after news of a new purchase.

| More on:
Young male investor smiling looking at laptop as the share price of ASX ETF CRYP goes higher today

Image source: Getty Images

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

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.

Motley Fool contributor Brooke Cooper 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.

More on Share Market News

A woman lies back and relaxes in her boat with a big smile on her face as it floats on the rising tide.
Share Market News

Why the Charter Hall Long WALE REIT share price isn’t rocking the boat

It's steady as she goes for this ASX real estate investment trust.

Read more »

A man and a woman sit in front of a laptop looking fascinated and captivated.
Share Market News

Here are the top 10 ASX 200 shares today

Tuesday was a particularly good day for these 10 ASX 200 shares.

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin.
Cryptocurrencies

Can the Bitcoin price reach US$30,000 again in 2022?

Rising interest rates have resulted in significantly less institutional investor interest in cryptos.

Read more »

An office worker and his desk covered in yellow post-it notes
Share Market News

Here are the 3 most heavily traded ASX 200 shares on Tuesday

Once again, its ASX 200 lithium stocks that are dominating today;s volume charts.

Read more »

A woman shouts through a megaphone.
Share Market News

In this most volatile of years, the ASX 200 is within shouting distance of turning positive

ASX 200 continues its recovery, now within shouting distance of turning positive for 2022.

Read more »

A man in his 30s holds his computer underneath and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Financial Shares

Are AMP shareholders heading for a $1 billion pay day?

AMP shareholders could benefit from buybacks following the successful divestment of AMP’s Collimate Capital business.

Read more »

Smiling man with phone in wheelchair watching stocks and trends on computer
Share Market News

5 things to watch on the ASX 200 on Tuesday

Here's what to expect on the ASX 200 on Tuesday...

Read more »

Businessman cheering at desk with arms in the air
Share Market News

Here are the top 10 ASX 200 shares today

These ten ASX 200 shares outperformed all others on Monday.

Read more »