03:08 PM EDT, 06/15/2022 (MT Newswires) -- This morning, Converge announced it has entered into a definitive agreement to acquire Germany-based organizations GfdB, IfmB, and DEQSTER. This is a significant leap for Converge in terms of establishing itself as one of the leading technology players in the European education market. CTS, with its Rednet and Visucom acquisitions, has been establishing itself in the German education sector and these new acquisitions will deepen its presence across Europe, writes Divya Goyal, Scotiabank analyst.
Scotia has updated its estimates to include the acquisition details, assuming the acquisitions close in Q3/22. Adding in GfdB, IfmB, and DEQSTER's trailing 12-month revenues as of March 31, 2022, on an as-is basis to CTS revenues July 1, 2022, onward results in F2022E net revenue of ~$2.6 billion and adjusted EBITDA of ~$158 million against Scotia's gross profit margin estimate of ~23% for F2022, Also, adjusted EPS of $0.36 and FCF/share of $0.36.
Maintain Sector Outperform rating and $14 share price target (11.5x NTM one-year forward estimates).