Incitec Pivot (ASX: IPL) share price rises following $ 142 million acquisition

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the Incitec Pivot Ltd (ASX: IPL) the share price is up Monday morning.

As of this writing, shares of the industrial chemicals company are up 1.5% to $ 3.35.

Why is the Incitec Pivot share price increasing?

Investors raised Incitec Pivot’s share price today after announcing a key acquisition.

According to the statement, the company has reached an agreement to acquire 100% of the shares of 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 EBITDA for fiscal 2020.

This investment is expected to be neutral in terms of earnings per share over the first full year of ownership and accretive earnings per share from that point on, once synergies are realized. The acquisition will be financed 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 manufacturer of industrial explosives and supplier of drilling, blasting and technical services based in France.

Management believes the transaction is highly complementary to the existing operations of its Dyno Nobel business. This is because it provides access to new markets where Dyno Nobel can leverage its high-end technology offering through substitution and growth strategies.

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

In addition, Titanobel has a well-established manufacturing base in France, which it believes will be critical to the implementation of the Dyno Nobel strategy in the region.

Incitec Pivot Managing Director and CEO Jeanne Johns said: “The acquisition of Titanobel will fit perfectly into our strategy of expanding our core explosives business, for which we are recognized globally, into new markets. . We are excited about the potential to serve new customers 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 once again demonstrates the opportunities we have to develop our two high-quality businesses and position them for the future, ”added Johns.

Richard L. Militello