TSX:ATS - Post Discussion
Post by
retiredcf on Sep 22, 2023 9:10am
RBC
September 22, 2023
ATS Corporation
Announces acquisition of Avidity Science for US$195MM
TSX: ATS | CAD 57.57 | Outperform | Price Target CAD 69.00
Sentiment: Positive
What happened – ATS Corporation ("ATS") announced it has agreed to acquire Avidity Science, LLC ("Avidity"), a designer/ manufacturer of Life Sciences automated water purification solutions, for US$195 million (~C$265 million). This represents 11.2x Avidity's 2023E Adjusted EBITDA (10.3x including synergies) and compares to ATS' current trading multiple of 12.5x F2025E Adjusted EBITDA. For background, Avidity generated US$81.9MM of revenue (40% recurring) and a 20.4% Adjusted EBITDA margin (implying ~US$16.7MM of Adjusted EBITDA) in calendar year 2022. In CAD, this implies ~$110MM of revenue and ~$22.5MM of EBITDA (~4% and ~5% of our F2024 revenue and Adjusted EBITDA forecasts, respectively).
Synergies and pro-forma leverage – ATS expects to realize US$1.5 million of synergies by year 3 and US$2.6 million by year 5 post-close. The company will fund the acquisition with cash and by drawing on its revolving credit facility, and projects pro-forma leverage of ~2.5x. The transaction is expected to close in the fourth calendar quarter of 2023.
Conference call at 8:30am ET – On the 8:30am call today, we will look for additional colour on: 1) how the Avidity business fits within ATS' Life Sciences offering; 2) Avidity's recent revenue growth/margin trajectory and management's expectations for the coming years; and, 3) integration plans given Avidity has a global customer base.
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