Dicker Data (ASX:DDR) share price sets record high on acquisition update

The computer hardware and software company reached record highs this morning.

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The Dicker Data Ltd (ASX: DDR) share price has jumped to its record high in early trade after Dicker confirmed the acquisition of Exeed Group last Friday.

Here we cover the moving parts of the deal and how the market has reacted so far.

But first, quick recap on Dicker Data

Dicker Data is a wholesale distributor of computer hardware and software products.

It has a footprint in Australia and New Zealand, although derives most of its revenue in Australia.

At the time of writing, Dicker Data has a market capitalisation of $2 billion.

Dicker to acquire Exeed Group

On 30 July Dicker announced it had entered into a binding agreement to acquire IT distribution company Exeed Group for $68 million.

The transaction would be finalised under a supported cash advance facility from Westpac bank. Dicker anticipates completing the transaction by the end of August.

Buying Exeed Group is a “very satisfying outcome” for Dicker, according to its chair and CEO David Dicker, who also believes the “combined companies are highly synergistic”.

As a result of the Exeed acquisition, the company gains access to revenue of NZD$310 million, alongside NZD$70 million in Australia.

Furthermore, Dicker Data anticipates the transaction will “propel Dicker Data NZ to become the second largest IT distributor in New Zealand”. Dicker forecasts combined revenue of NZD$500 million for the merged companies.

Investors have jumped on Dicker shares since the market open, viewing the news as a favourable outcome for the company.

Dicker shares are now exchanging hands at $12.85 apiece, an 11% jump from market open, and also setting a record high.

Dicker Data share price snapshot

The Dicker Data share price has posted a year to date return of 23%, extending the previous 12 month’s return of 69%. In the past month, Dicker shares have climbed 16% into the green.

These returns have outpaced the S&P / ASX 200 index (ASX: XJO)’s return of around 23% over the past year.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. 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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