Landmark White enters acquisition agreement and expands footprint
Independent property valuation and consultancy firm, Landmark White (ASX:LMW) has today informed the market of its agreement to acquire the property valuation firm, Taylor Byrne.
LMW has entered into agreement to purchase 100% of Taylor Byrne, a move first reported by Finfeed on 8 October.
The acquisition is a calculated move by LMW that will advance the company’s geographical footprint and cement its position as the largest ASX listed valuation services business.
The move will enable LMW to substantially reduce costs as it internalises current third part contracts and spreads the work across Taylor Byrne’s offices.
Taylor Byrne is a revenue generating business ($22.7M last financial year) and has been in operation since 1960. Since commencing operations in Brisbane, the company subsequently expanded throughout Queensland and NSW.
LMW’s acquisition target offers a full range of valuation services, with over 90 valuers operating across Australia’s eastern seaboard. The acquisition will also hand LMW a full suite of valuation services along with strong portfolio valuation and property consultancy divisions, including a well-performed rural division.
Along with cost synergies through the two operations with shared overheads, the acquisition is set to deliver sustainable and diversified top-line growth, with the transaction anticipated to be Earnings Per Share accretive in FY19 with full effects expected to be realised in FY20 of circa 1.8 cents.
The following table indicates the expected financial effect of the transaction.
Put simply, the advantages of this acquisition are threefold:
- Increased revenues
- Increased margins
- Larger geographical footprint.
Chris Coonan, LMW Chief Executive Officer said of the acquisition: “In line with our previously stated acquisition strategy, we have continued to evaluate opportunities for growth. We are conscious of the benefits of expanding a geographical footprint, and Taylor Byrne is an ideal fit for that goal. We eagerly look forward to delivering the benefits of additional scale, capacities and sustainable earnings growth for our shareholders, and continuing to provide LMW’s personalised and streamlined service for our existing and new clients.”
Timothy Rabbitt, Taylor Byrne’s Chief Executive Officer was also positive: “This transaction represents an exciting next step for Taylor Byrne. Our employees and clients stand to benefit from the combined capacities of the two businesses, and we very much look forward to working with LMW to build a much larger property services business.”
The acquisition of Taylor Byrne provides LMW with a further aligned/incentivised registry, with 50% of the acquisition consideration being provided in shares. The vast majority of Taylor Byrne shareholders, who are current employees, will continue to be employed by LMW.
The terms of the acquisition are as follows:
- Total consideration value of AUD10,300,000, based on a 4.5x normalised FY18 EBITDA multiple payable as:
- AUD5,150,000 cash consideration; and
- 8,583,333 fully paid ordinary shares in LMW at a deemed issue price of AUD0.60 (Consideration Shares).
- The share consideration will be subject to voluntary escrow, with one quarter of the shares released every 6 months, with the first release to occur one year from Completion.
As the cash component will be funded out of existing cash reserves and financing facilities, there will be no new share issuance other than the Consideration Shares along with 440,834 shares issued to settle advisor fees associated with the transaction.
By structuring the transaction through voluntarily escrowed share consideration, the acquisition aligns Taylor Byrne’s 24 Shareholders, each of whom are existing employees, directly with LMW’s vision and goals.
Completion of the acquisition and issue of Consideration Shares to Taylor Byrne shareholders is expected to occur no later than 31 October.