Renew Holdings (AIM:RNWH) announced it has struck a deal to acquire Porter Brothers Holdings, parent company of specialist energy contractor PBU (UK) Ltd, for total consideration of up to £50m on a cash and debt free basis.
The London-listed engineering services group, which supports the maintenance and renewal of UK infrastructure across rail, energy and environmental markets, is making the acquisition through its wholly owned subsidiary Excalon Holdings Limited.
PBU supplies extra high voltage cabling and directional drilling engineering services to the energy distribution market, capabilities Renew said will broaden the range of opportunities it can address across the electricity transmission and distribution network.
The initial cash consideration of £31.1m is funded from Renew's existing banking facilities and is based on a sustainable EBIT of £3.9m and EBITDA of £5.5m. A further sum of up to £18.9m is contingent on the vendors hitting specific profit targets over a three-year period.
The company described the deal as immediately earnings enhancing, and that the group retains a strong balance sheet while continuing to evaluate further earnings-accretive acquisitions as part of its "disciplined compounding strategy."
Renew's chief executive, Paul Scott, said the acquisition "represents an excellent strategic fit for the Group, adding complementary specialist capabilities to our already well-established position in the regulated energy market," and pointed to "unprecedented levels of investment in the UK's electricity transmission and distribution networks."
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The deal follows Renew's recent acquisitions of Emerald Power, Electricity Distribution Engineering Services and PWR-X, which the company said have together built Excalon Holdings into a provider capable of a full turnkey solution from design through delivery.
Renew said this positions the group to access a larger share of the roughly £50bn to £60bn of investment committed across the RIIO-ED2 and ET3 regulatory control periods and beyond.
It is the latest deal for Renew, which agreed to acquire Edwards Diving Services for up to £13m earlier this year to expand into specialist water and environmental services ahead of the AMP8 spending period in the water sector.