The trick to successful M&A is knowing the target inside-out, not over-paying and then integrating flawlessly to deliver the desired synergies. On all of these fronts, today's £15m purchase of Lambert Automation (excludes 3 year £2.5m earnout) scores highly.
Indeed, this strategic acquisition is not only a perfect fit with regards to technology, culture and customer base, but also relatively low risk (re similar businesses) and value accretive.
On top the deal should be "materially earnings enhancing", along with delivering RoIs significantly above the enlarged group’s cost of capital.
Consequently we have upgraded our 2019 and 2020 PBT forecasts to £4.6m (vs £3.5m before) & £6.4m (£4.4m) respectively. In turn, lifting adjusted EPS to 17.2p (vs 13.0p) and 23.8p (16.5p) for the next two years, and likewise pushing up the valuation from 200p to 245p/share.
