AG Barr PLC (LSE:BAG) won the plaudits of Liberum today which put the maker of Irn-Bru on its buy list following the £32mln acquisition of Boost Drinks Holdings Limited which was announced yesterday.
The broker felt the acquisition was well priced at 0.5x sales and c.10x profits and that margin gains could be made once the business is fully integrated.
“Boost offers long term high growth in categories that complement its current portfolio and can leverage Barr’s distribution strength” analysts wrote.
The deal was seen as a signal of management’s intent to use its very strong balance sheet for M&A.
“In this current market there could be multiple opportunities to buy further brands at sensible valuations” Liberum noted.
The broker has upgraded the company to buy with a price target of 525p.
It forecast Boost would contribute around £1mln to pre-tax profits for the fiscal year 2024 with revenues of around £60mln to £65mln.