Incitec Pivot (ASX:IPL) share price higher on $142m acquisition

Incitec Pivot is making an acquisition…

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The Incitec Pivot Ltd (ASX: IPL) share price is pushing higher on Monday morning.

At the time of writing, the industrial chemicals company’s shares are up 1.5% to $3.35.

Why is the Incitec Pivot share price rising?

Investors have been bidding the Incitec Pivot share price higher today after it announced a key acquisition.

According to the release, the company has entered into an agreement to acquire 100% of the shares in Explinvest for 91 million euros (~A$142 million) on a debt free and cash free basis. This represents an expected acquisition multiple of 7.8x FY 2020 EBITDA.

This investment is expected to be earnings per share neutral in the first full year of ownership and earnings per share accretive from then on after synergies are realised. The acquisition will be funded from the company’s existing cash and debt reserves.

What is Explinvest?

Explinvest is the holding company of the Titanobel Group, which is a leading industrial explosives manufacturer and drilling, blasting, and technical services provider based in France.

Management believes the transaction is highly complementary to the existing operations of its Dyno Nobel business. This is due to it providing access to new markets where Dyno Nobel can leverage its premium technology offering through substitution and growth strategies.

It also notes that Titanobel has a strong customer base in the mature and stable European market with exposure to the quarry and construction sector, the growing African hard rock sector, and the rapidly expanding mining of future facing minerals in the EMEA region.

Furthermore, Titanobel is supported by a well-established manufacturing base in France, which it believes will be key to the delivery of the Dyno Nobel strategy in the region.

Incitec Pivot’s Managing Director and CEO, Jeanne Johns, said: “Titanobel’s acquisition will fit well with our strategy of taking our core explosive business, for which we are recognised globally, to new markets. We are excited for the potential to service new clients and partners with our market leading technology.”

“The ability to build on Titanobel’s rich history, market position and regional presence is an exciting chapter in our growth journey, and we look forward to welcoming the Titanobel team to IPL. This acquisition further demonstrates the opportunities we have to grow our two high quality businesses and position them for the future,” Johns added.

Motley Fool contributor James Mickleboro 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.

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