Austco Healthcare (AHC:ASX) has signed a binding conditional Share Purchase Agreement to acquire 100% of the shares in Amentco Enterprise Group.
Ametco is a healthcare and security solutions provider and a Certified Austco Nurse Call reseller.
In February Austco announced it was moving to acquire 100% of the shares in Amentco.
Austco and Amentco are now working towards satisfying the conditions precedent specified in the SPA with a view to completion of the Amentco acquisition on or around 1 May 2024.
The Acquisition of Amentco offers significant benefits for Austco Healthcare:
- Expansion of Market Presence: Austco Healthcare can expand its market presence in Australia by integrating Amentco's existing business and customer base. This allows Austco to reach a broader audience and increase its regional market share.
- Diversification of Product and Service Offerings: Amentco's expertise in communication and security solutions complements Austco Healthcare's existing healthcare-focused offerings. By incorporating Amentco's security products and services, Austco can provide a comprehensive solution to its clients, enhancing customer satisfaction and loyalty.
- Revenue Synergies: The Acquisition presents opportunities for revenue synergies through cross- selling of products and services. Austco can leverage its relationships with healthcare facilities to introduce Amentco's security and communication solutions and vice versa, thereby increasing sales and revenue.
- Operational Efficiencies: Consolidating operations between Austco and Amentco can lead to cost savings and operational efficiencies. Streamlining processes, sharing resources, and optimising workflows can reduce overhead costs and improve profitability.
- Talent Retention and Knowledge Transfer: Retaining key personnel from Amentco ensures continuity and expertise within the merged entity. This helps preserve relationships with existing customers and facilitates the transfer of knowledge and best practices between the two organizations.
- Enhanced Competitive Advantage: By combining resources, expertise, and market reach, Austco Healthcare gains a stronger competitive position in Australia's healthcare and security sectors. This will enable the Company to compete better in regional growth opportunities.
Overall, the acquisition of Amentco by Austco Healthcare presents a strategic opportunity for both companies to strengthen their market positions, drive growth, and deliver enhanced value to customers in Australia.
Austco intends to merge Amentco's extensive business with its current operations, which span hundreds of sites and include important security solutions customers across Queensland. Key personnel from Amentco will be retained to facilitate a seamless transition for both customers and employees. This Acquisition is anticipated to yield substantial revenue synergies by enabling cross-selling of products and services and streamlining operational processes.
Amentco will be acquired on a cash-free, debt-free basis for a total purchase price of $10,600,000 and will be subject to customary completion adjustments for working capital, any net debt assumed and an earnout.
The Purchase Price is based on:
- a) an upfront cash payment of $5,000,000;
- b) the issue at completion of $2,000,000 of Austco shares at issue price based on the 30-day volume weighted average share price of Austco determined two business days before completion; and
- c) an earnout amount calculated on the average FY24 EBITDA and FY25 EBITDA of Amentco multiplied by 3.5 times less the Upfront Payment.