NCC Group announced the acquisition of Fox-IT for a total consideration of €133.25m on Tuesday. At c.20.8x Dec’16 EV/EBITDA the valuation reflects the escalating price of cybersecurity assets in the current environment. The accompanying placing and open offer to raise £126.3m at 275p means the acquisition is earnings dilutive in all forecast years, although the level of fundraise also provides firepower for further acquisitions. Until the funds are reinvested the shares look expensive on Dec’16 PER and EV/EBITDA of 23.9x and 16.6x respectively. That said, investors have shown their support for the company so with further acquisitions to come, the shares should be underpinned at this level. We leave our TP unchanged at 285p. Hold.
