The Johns Lyng Group Ltd (ASX: JLG) share price is pushing higher during early afternoon trade. This comes after the building services group announced an update on the acquisition of Unitech Building Services (Unitech).
Established in 1995, South Australian-based Unitech is an insurance building services company focused on building maintenance, repairs and renovations. Notably, the business has become a preferred supplier for a number of Australia's largest insurance companies. Unitech operates its workshops in both the inner southern suburbs and the northern suburbs of Adelaide.
At the time of writing, Johns Lyng shares are up 1.65% to $4.92.
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Acquisition complete
Investors are buying Johns Lyng shares after the company provided its latest update to the ASX.
According to its release, Johns Lyng advised that it has completed the acquisition of a 60% controlling interest in Unitech.
The deal saw Johns Lyng pay $1.9 million in cash for the business, funded from its existing cash reserves. An earnout component is also payable should Unitech meet specific financial hurdles over the FY21 and FY22 periods.
Johns Lyng highlighted that the transaction is debt and surplus cash free, with earnings accretive expected immediately.
The remaining 40% stake in Unitech, held by original owners and co-directors, will continue to run the day-to-day operations.
Following the takeover, Johns Lyng increased exposure to the South Australian market will present strong growth opportunities moving forward.
Johns Lyng chief executive, Scott Didier commented:
We're really pleased to bring Unitech into the Johns Lyng fold. It's a well-run business with a reputation built on repeat, high quality, customer-centric service provision to both the domestic and commercial building markets.
This deal creates multiple opportunities for Johns Lyng to expand parts of our core offering in South Australia by leveraging Unitech's position and also our own existing relationships. These include growing both our Makesafe business and our Large-loss insurance building offering in the local market, and introducing our restoration services business, Restorx, into SA.
We also now have an opportunity to build our capacity for catastrophe (CAT) response in SA.
About the Johns Lyng share price
Over the past 12 months, Johns Lyng shares have catapulted by more than 100%, with over 50% in 2021 alone. The company's share price reached an all-time high of $5.13 in June this year before some profit-taking swooped in.
On valuation grounds, Johns Lyng commands a market capitalisation of roughly $1.1 billion, with around 224 million shares on its registry.
