Johns Lyng (ASX:JLG) share price edges higher on acquisition update

This ASX is expanding its business portfolio…

| More on:
A happy construction worker leap-frogs over another as a third looks on

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 Johns Lyng Group Ltd (ASX: JLG) share price is pushing higher during early afternoon trade. This comes after the building services group announced an update on the acquisition of Unitech Building Services (Unitech).

Established in 1995, South Australian-based Unitech is an insurance building services company focused on building maintenance, repairs and renovations. Notably, the business has become a preferred supplier for a number of Australia's largest insurance companies. Unitech operates its workshops in both the inner southern suburbs and the northern suburbs of Adelaide.

At the time of writing, Johns Lyng shares are up 1.65% to $4.92.

Acquisition complete

Investors are buying Johns Lyng shares after the company provided its latest update to the ASX. 

According to its release, Johns Lyng advised that it has completed the acquisition of a 60% controlling interest in Unitech.

The deal saw Johns Lyng pay $1.9 million in cash for the business, funded from its existing cash reserves. An earnout component is also payable should Unitech meet specific financial hurdles over the FY21 and FY22 periods.

Johns Lyng highlighted that the transaction is debt and surplus cash free, with earnings accretive expected immediately.

The remaining 40% stake in Unitech, held by original owners and co-directors, will continue to run the day-to-day operations.

Following the takeover, Johns Lyng increased exposure to the South Australian market will present strong growth opportunities moving forward.

Johns Lyng chief executive, Scott Didier commented:

We're really pleased to bring Unitech into the Johns Lyng fold. It's a well-run business with a reputation built on repeat, high quality, customer-centric service provision to both the domestic and commercial building markets.

This deal creates multiple opportunities for Johns Lyng to expand parts of our core offering in South Australia by leveraging Unitech's position and also our own existing relationships. These include growing both our Makesafe business and our Large-loss insurance building offering in the local market, and introducing our restoration services business, Restorx, into SA.

We also now have an opportunity to build our capacity for catastrophe (CAT) response in SA.

About the Johns Lyng share price

Over the past 12 months, Johns Lyng shares have catapulted by more than 100%, with over 50% in 2021 alone. The company's share price reached an all-time high of $5.13 in June this year before some profit-taking swooped in.

On valuation grounds, Johns Lyng commands a market capitalisation of roughly $1.1 billion, with around 224 million shares on its registry.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »