On Thursday, Ashtead (LON:AHT) Technology Holdings plc (AIM: AT.), a global provider of subsea equipment rental and solutions, announced its acquisition of Seatronics Limited and its subsidiaries, a subsea electronics and ROV tooling rental and services business, as well as J2 Subsea Limited, for a total cash consideration of £63 million. The acquisition from Acteon Group Operations (UK) Limited, which is majority-owned by One Equity Partners LLC and Buckthorn Partners LLP, is set to enhance Ashtead's survey and robotics capabilities and drive international growth.
The deal is expected to be mid-to-high single-digit earnings accretive in the first full year of ownership, with a return on invested capital exceeding the group's average cost of capital. Ashtead Technology's pro-forma leverage is projected at approximately 1.8 times as of June 30, 2024, with a reduction to below 1.5 times anticipated by the end of 2025. The completion of the acquisition is contingent on standard closing conditions, including approval from the Competition and Markets Authority.
Seatronics and J2, with operations across Singapore, UAE, UK, and the US, have been part of Acteon Group for over a decade, servicing the offshore energy market. The acquisition will broaden Ashtead Technology's rental fleet, adding over 7,000 proprietary assets and a skilled workforce with extensive domain knowledge. Seatronics and J2's expertise in subsea oil & gas and renewable energy infrastructure complements Ashtead's existing portfolio, with 55 percent of their revenue generated outside Europe.
To fund the acquisition, Ashtead Technology has increased its revolving credit facility by £70 million to a total of £170 million, with an additional uncommitted £40 million accordion facility. The increased facility is supported by the group's banking partners, including ABN Amro, Citi, HSBC, Virgin Money (LON:VM), and the addition of RBS (LON:NWG).
The Board of Ashtead Technology is confident in the medium-term prospects for Seatronics and J2, planning to invest approximately £10 million in the fleet in the first year of ownership. This investment is expected to drive a high teens percentage increase in EBITA during the investment period, aligning margins with group levels over time.
Allan Pirie, CEO of Ashtead Technology, expressed enthusiasm about the acquisition, emphasizing the strategic fit and the expected enhancement of the company's international footprint and customer relationships. Brice Bouffard, CEO of Acteon, conveyed his confidence in the continued growth and value that Seatronics and J2 will bring to Ashtead Technology's global customers.
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