LMW to make strategic acquisition targeting Australia’s eastern seaboard

LandMark White ASX LMW Taylor Byrne
Taylor Byrne was established in 1960 and currently operates 26 offices across Queensland and New South Wales.

One of Australia’s leading property valuation companies LandMark White (ASX: LMW) is set to expand its property-market coverage after announcing a buyout of property valuation firm Taylor Byrne.

The company has said the deal is likely to lead to “revenue growth opportunities” and is aimed at cementing LMW’s position as the largest ASX-listed valuation services business.

The acquisition of Taylor Byrne directly expands LMW’s regional footprint throughout the eastern seaboard of Australia, advancing LMW’s market share and capacity to service clients.

According to LMW, the transaction is expected to generate additional annualised revenue of $22.7million and EBITDA of approximately $2.3million. As a direct comparison, LMW reported a full year profit before tax of $5.8 million earlier this year, an increase of 143% on a year-on-year basis.

Deal rationale

The deal is expected to deliver multiple synergies for LMW, including an “advanced geographical footprint” and leveraging Taylor Byrne’s network of offices to streamline its operations and reduce the reliance on contracted third parties. A key benefit of the takeover is a reduction in costs and improved margins over time, including improved top-line growth.

Other benefits include improving LMW’s ability to service statutory and residential work as well as the introduction of a rural division.

According to LMW’s CEO Chris Coonan, the acquisition of Taylor Byrne will provide the company with a “further aligned and incentivised registry” and that all staff currently employed by Taylor Byrne will be retained following the completion of the deal.

“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,” the company said.

“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,” said Mr Coonan.

Taylor Byrne synergies

Taylor Byrne currently operates from 26 offices across Queensland and New South Wales, with the takeover meaning that LMW will absorb all its operations and staff once the deal is completed.

The announced deal has been valued at $10.3 million based on a 4.5x normalised FY18 EBITDA multiple payable as: $5.15 million in cash and 8,583,333 fully paid ordinary shares in LMW at an issue price of $0.60 per share.

The transaction is anticipated to be “earnings per share accretive” in the 2019 financial year with full effects expected to be realised the following year, at a forecasted $1.8 cents per share.

Importantly, 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.

To ensure its own capital position is not adversely affected, LMW has said that the cash component will be funded out of existing cash reserves and financing facilities, meaning there will be no new share issuance.

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