Japan’s Nomura Research Institute will pay $350 million to acquire major Perth-based services provider ASG Group, subject to shareholder and regulatory approval.
The offer values ASG at more than 13 times earnings before interest, tax, depreciation and amortisation, reported the Australian Financial Review. NRI has hired ANZ Corporate finance to advise on the deal while Citigroup Perth will advise ASG.
ASG, which offers consulting, managed services, hosting and cloud services, reported record revenue of $188.7 million in 2016, up 16 percent on the previous year. It posted a 32 percent increase in EBITDA to $26.7 million, and net debt of $2.9 million - well below the group’s forecast of $5 million.
The company’s annual review also reported $185 million in revenue already locked in for FY17, credited to the expansion of multi-year contracts.
NRI is a Japanese-based consulting and IT solutions group listed on the Tokyo Stock Exchange with a market capitalisation of about ¥794 billion (A$10.2 billion) as of 29 September 2016.
An internal business committee has unanimously recommended that ASG shareholders vote in favour of the sale, provided an independent expert declares the scheme is in the best interest of the shareholders and that no superior proposal arises.
If approved, the acquisition will deliver for major shareholder ASG managing director Geoff Lewis, as well as other big investors Ausbil Investment Management and Pengana Capital.
In 2012, ASG declined a takeover bid from Lockheed Martin, citing later in an ASX announcement that the giant US contractor had “materially undervalued” ASG shares.
Earlier this year, ASG hired former Datacom Systems’ Basil Lenzo as its new general manager for Western Australia. Lenzo founded Datacom WA in 2007 and steered it to its acquisition by Datacom Group in 2015.