Q: Could I have your thoughts on K-Bro’s acquisition of Star Mayan in the U.K. - the largest in the company’s history and described by the CEO as “ transformative “.
Thank-you.
Thank-you.
5i Research Answer:
It looks good. It positions the company in the top three players in the UK. At $200M, it represents more than half KBL's market cap. Debt, already high, will increase (a financing will raise $70M in equity), but so will earnings and revenue (not quantified). As in Canada, these businesses sign long term contracts and are relatively risk-free until contract renewal. But shifts are not overly common. It is a big bite for the company but its prior acquisition history is good.