Many attractions of Phoenix acquisition: Wilmington recently acquired Phoenix Health & Safety for an initial consideration of c£30m – Phoenix is highly complementary to the previous Astutis acquisition, expanding the group’s footprint in health & safety markets and capturing more of the structural expansion in governance, risk, and compliance spending. We believe Phoenix is delivering organic growth well into double digits from expanding its customer numbers, ensuring that the initial headline multiple of c.12x EBITDA falls rapidly, regardless of any further earn-out payments.
Balance sheet potential: Even post this, we forecast a net cash position of >£45m at year end – combined with borrowing headroom, this still leaves >£100m of acquisition firepower. We would not be surprised to see more similar deals in the new year, strategically bolstering the group’s growth potential and utilising the benefit of the platform that has been built.
Still fundamentally mis-priced: In terms of forecasts, we increase revenues by 13% longer-term, with EPS up 8% – this drives our target price increase to 490p. Despite the strong run, Wilmington currently trades at c11x CY25E EBITDA – this remains below global peers and industry transaction benchmarks and we therefore see plenty of multiple expansion to go for, regardless of upside risk to estimates.
