SRG Global Ltd (ASX: SRG) shares are catching the eye on Tuesday.
In morning trade, the ASX 300 stock is up 23% to a record high of $2.52.
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Why is this ASX 300 stock hitting a record high?
Investors have been fighting to get hold of the engineering services company's shares today after it announced a "transformational acquisition."
According to the release, the ASX 300 stock has entered into a binding agreement to acquire 100% of Total AMS and its subsidiaries (TAMS) for $85 million on a cash-free and debt-free basis.
The company intends to fund the acquisition through a combination of cash and scrip. This comprises approximately $57.3 million from existing cash and available debt facilities and $27.7 million of SRG Global scrip at $1.99 per share. The latter will be escrowed for two years.
There is also a two-year earn-out opportunity which is payable each year in cash. This will be 100% of TAMS' annual EBITDA above $30 million and below $40 million, and 50% of TAMS annual EBITDA above $40 million.
What is TAMS?
TAMS is a leading end-to-end diversified marine infrastructure services partner with a 25+ year history and full self-perform capability. It is an expert in design, engineering, construction, maintenance and remediation services, through long-term relationships with key owners and users of critical port and marine infrastructure.
It also has a market-leading national marine infrastructure position with exposure to attractive growth markets. This includes resources, energy, transport, water, and defence.
The company notes that the acquisition implies an FY 2026 EBITDA multiple of 2.7x, EBIT multiple of 3.2x, and is expected to be around 25% earnings per share (EPS) accretive to FY 2026 earnings (pre synergies).
Why this deal?
Management highlights that TAMS adds a highly complementary capability to SRG Global's existing business with a sole-source, end-to-end marine infrastructure service offering.
It is also consistent with its strategy of driving step-change growth in recurring earnings underpinned by long-term collaborative maintenance and asset lifecycle agreements.
The ASX 300 stock's managing director, David Macgeorge, said:
I am pleased to announce the transformational acquisition of TAMS, who is a market leader in the marine infrastructure services sectors. TAMS is a leading end-to-end delivery partner with unparalleled self-perform capability through long-term relationships with resources, energy and government clients. TAMS is complementary to SRG Global's service offering in key growth markets and geographic locations; and will further enhance our strong track record of cross-selling our end-to-end services.
TAMS is a significant and highly attractive acquisition with FY26 pro forma EPS accretion of circa 25% pre any synergies or cross selling opportunities and brings a capital light investment profile; and more than $600 million Work in Hand with a $3 billion Opportunity Pipeline.
