Jerry
The Covelya acquisition is accretive in 2027 and it combines two leading subsea companies. Bigger is better in this industry. Combined revenue goes to $350M+. This should get the attention of larger, and importantly, US sector investors. The target company has had good growth (24% compounded) over the past two years. It adds customers, locations and products. There should be some decent synergies ($10M to start). PNG acquires 12 faciltiies and 750 employees. It is a big bite for the company at $615M. With cash on hand and the equity financing, the balance sheet will remain in good shape. The price ($8.50) of the deal is OK but we would note that the stock ran up fairly hard going into this news (up 10% this week alone). We would expect some volatility as investors digest the share issue and news. PNG also announced a 2026 outlook, which was largely in line with estimates but we think the acquisition will be a bigger driver of the stock in the short term. We would be comfortable buying the deal and the acquisition looks good, though there is some risk: integration needs to go well. We would be comfortable buying shares in the financing.