People Infrastructure Ltd (ASX: PPE) shares jumped to record territory this morning after the company announced it is taking majority shareholdings in two "highly complementary" businesses.
In early trade, the People Infrastructure share price briefly hit an all-time record high of $4.80 before partially retreating. At the time of writing, the company's shares are trading 0.22% higher at $4.55 each.
People Infrastructure share price gets a boost
Judging by today's People Infrastructure share price performance, investors appear pleased with the company's latest investments. In an announcement to the ASX before market open this morning, People Infrastructure advised it has entered into agreements to acquire shares in Techforce Personnel and Vision Surveys (QLD).
Techforce Personnel
Techforce Personnel is a provider of casual workers in Western Australia and South Australia. The company provides staff to a range of industries, with a focus on industrial services and mining sectors.
People Infrastructure will acquire 79.3% of the shares in Techforce Personnel for $13.1 million in cash and $250,000 in People Infrastructure shares. The company also advised, "Up to a further $2.72m will be payable as deferred cash consideration after completion…"
According to People Infrastructure, Techforce Personnel's services are highly aligned with its own industrial and services business. The added benefit the company sees with its investment is that Techforce Personnel will provide greater exposure to People Infrastructure's underserved states of Western Australia and South Australia.
Techforce Personnel has a strong track record of organic growth, with a compound average growth rate (CAGR) for revenue of 23.7% over the last three years.
The acquisition is expected to contribute $5.8 million in earnings before interest, taxes, depreciation, and amortisation (EBITDA) in FY22.
Vision Surveys
Vision Surveys is a multi-discipline surveying business servicing metropolitan and regional Queensland. The company is focused on sectors including infrastructure, construction and residential development. People Infrastructure has entered into a binding agreement to purchase 75% of the shares in the company.
The acquisition will comprise a $6.7 million upfront payment, made up of 75% cash and 25% People Infrastructure shares. A further $3.8 million may be payable as deferred consideration over three tranches based on EBITDA hurdles across FY22, FY23 and FY24.
Vision Surveys has a similar strong track record of organic growth with revenue CAGR of 14% over the last three years.
Earnings accretive acquisitions
The acquisitions are expected to be approximately 19% earnings-per-share (EPS) accretive, adding a meaningful kick to People Infrastructure's financial performance. The potential boost in earnings, alongside the strong organic growth profile of the two acquired companies, appears to be having a positive effect on the People Infrastructure share price today.
In response to the acquisitions, People Infrastructure CEO Declan Sherman said:
The acquisition of Techforce Personnel and Vision Surveys Qld are highly complementary to our existing business. Both businesses are well established in their regions, have strong customer relationships, and proven leadership teams who have successfully grown these businesses over several years. Through being part of a larger group, these businesses will be able to accelerate their growth through adding service lines, sharing customers and growing geographically
