SigmaRoc PLC’s (LON:SRC) purchase of Nordkalk can be as much as 30% earnings accretive as well as adding 150% to revenues, according to broker Liberum.
The building materials group announced last week it was buying limestone producer Nordkalk for €470mln including debt, to be part-funded by €300mln in new equity.
Liberum said the acquisition is low risk as Nordkalk diversifies the group’s geographical and end markets while its profitability has been consistent and is improving.
Nordkalk is Northern Europe’s leading limestone producer, reporting €67mln annual underlying profits [EBITDA] from revenues of €276mln.
The business operates from 23 active sites with a presence in 10 countries, with Finland, Sweden and Poland the most important.
The bulk of production volumes go as crushed limestone into construction, but higher value ground, calcined and slaked lime products are used widely in metals & mining, pulp & paper and agriculture.
“Nordkalk expands its footprint to fill the area targeted, but also brings scale,” said the broker.
“More than this, the strength of cash flows from Nordkalk means the group now has c.£78m to spend each year on acquisitions across six platforms; achieving this could drive 19% annual earnings growth [CAGR] from 2021E to 2024E.
“This could in turn drive performance comparable to returns delivered by other heavy material buy-and-builds in recent years (Aggregate Industries, Breedon and CRH).”
Shares in SigmaRoc were unchanged at 95p today, having more than doubled over the past twelve months.