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Calian Group Ltd. Announces acquisition of U.K.-based defence training provider for up to $41MM
TSX: CGY | CAD 54.12 | Outperform | Price Target CAD 72.00
Sentiment: Positive
Calian announces acquisition of Mabway for up to $41MM. This morning, Calian announced that it has acquired U.K.-based Mabway for up to $41MM ($32.4MM upfront cash upon closing, with the potential for an $8.6MM earnout). Mabway is a provider of training for defence and maritime. The company has +1,000 employees and a presence across Europe and the Middle East. Mabway’s service offerings include large scale simulation defence training, technical engineering training for naval and maritime, and digital learning solutions. Strategically, the acquisition of Mabway expands Calian’s military training and simulation solutions portfolio to the U.K. and the Middle East, and provides a footprint for continued growth of its training business outside of Canada.
Calian is paying 4.0x EV/EBITDA. Excluding the earn-out, Calian is paying 4.0x EV/EBITDA. Including the earn-out, Calian is paying 5.1x EV/EBITDA. Mabway generated $35MM TTM revenue and $8MM TTM EBITDA. The takeout multiple is below Calian’s average takeout at 6.9x EV/EBITDA over the past 5 years. Additionally, Calian expects the transaction to be immediately accretive to both the Learning segment and consolidated adj. EBITDA and adj. EBITDA margins, with the potential for additional margin expansion through cost synergies.
Strong pace of acquisitions in FY24 to date, takeout multiples tracking below Calian’s 3-year target. Calian has now deployed $90MM capital on 3 acquisitions in FY24, which compares against $47MM on 1 acquisition in FY23. Recall Calian’s 3-year plan calls for a 15% revenue CAGR through a combination of capital deployed on acquisitions and organic growth. Calian is targeting deploying $250-300MM capital at 6-8x EBITDA over the next 3 years. In FY24, Calian has deployed capital at an average of 4.9x EBITDA, which is better than the multiples embedded in its 3-year plan.
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