SRG Global Ltd (ASX: SRG) shares have captured investor attention this Tuesday, with the company’s stock soaring 23% to reach a record high of $2.52 during morning trade. This remarkable surge follows the announcement of a “transformational acquisition” that has sparked significant interest in the engineering services company.
The company revealed it has entered into a binding agreement to acquire 100% of Total AMS and its subsidiaries (TAMS) for $85 million on a cash-free and debt-free basis. The acquisition is set to be funded through a combination of cash and scrip, with approximately $57.3 million coming from existing cash and available debt facilities, and $27.7 million of SRG Global scrip at $1.99 per share, which will be escrowed for two years.
Understanding the TAMS Acquisition
TAMS is a well-established leader in the marine infrastructure services sector, boasting over 25 years of experience and a comprehensive self-perform capability. The company excels in design, engineering, construction, maintenance, and remediation services, maintaining long-term relationships with key stakeholders in critical port and marine infrastructure.
With a strong national presence in the marine infrastructure market, TAMS is strategically positioned in sectors poised for growth, such as resources, energy, transport, water, and defense. The acquisition is expected to enhance SRG Global’s market position, with an implied FY 2026 EBITDA multiple of 2.7x and an EBIT multiple of 3.2x. Notably, the deal is projected to be approximately 25% earnings per share (EPS) accretive to FY 2026 earnings, even before accounting for potential synergies.
Strategic Rationale Behind the Deal
Management at SRG Global highlights that TAMS brings a highly complementary capability to the company’s existing operations, offering a sole-source, end-to-end marine infrastructure service. This aligns with SRG Global’s strategy of achieving step-change growth in recurring earnings, supported by long-term collaborative maintenance and asset lifecycle agreements.
David Macgeorge, Managing Director of SRG Global, expressed his enthusiasm for the acquisition:
“I am pleased to announce the transformational acquisition of TAMS, who is a market leader in the marine infrastructure services sectors. TAMS is a leading end-to-end delivery partner with unparalleled self-perform capability through long-term relationships with resources, energy, and government clients. TAMS is complementary to SRG Global’s service offering in key growth markets and geographic locations; and will further enhance our strong track record of cross-selling our end-to-end services.”
Financial Implications and Future Outlook
The acquisition of TAMS is not only seen as a significant strategic fit but also as a financially attractive proposition. The deal is expected to result in a pro forma EPS accretion of approximately 25% by FY26, prior to any synergies or cross-selling opportunities. Furthermore, TAMS brings a capital-light investment profile and more than $600 million in work in hand, with a $3 billion opportunity pipeline.
This development represents a bold move by SRG Global to solidify its position in the marine infrastructure services market, leveraging TAMS’ expertise and market presence. As the company integrates TAMS into its operations, it will be crucial to monitor how effectively SRG Global can capitalize on the acquisition to drive growth and enhance shareholder value.
Looking ahead, SRG Global’s strategic acquisition of TAMS positions the company to expand its footprint in high-growth sectors, potentially setting the stage for further market advancements and increased competitiveness in the industry.
