Service Stream agrees to buy Programmed for $975M
Key points
- Service Stream has executed an agreement to acquire the operations provider program for $975 million before debt adjustments.
- The deal is funded via expanded debt facilities alongside a fully underwritten $475 million equity raising.
- The company stated that the transaction is expected to expand its addressable market and enhance earnings resilience.
Essential infrastructure provider Service Stream (ASX:SSM) has agreed to acquire the operations business program for a purchase price of $975 million.
The transaction represents an enterprise value multiple of 6.1 times earnings before interest, tax, depreciation, and amortization after factoring in run-rate cost synergies.
The group stated that the transaction will be financed via an expansion of existing debt facilities and proceeds from a fully underwritten $475 million equity raising.
Service Stream's Managing Director Leigh Mackender said, "The acquisition of Programmed marks a significant and exciting milestone in Service Stream’s journey, bringing together two businesses with highly complementary capabilities and supporting significant and sustainable value creation in support of our clients and shareholders."
Service Stream also expects the deal to generate $30 million in initial run-rate cost synergies and lift pro forma financial year 2027 earnings per share by more than 20%.
Following the announcement, the Service Stream share price was unchanged at $2.20 as shares entered a trading halt.
The acquisition is designed to expand the group's presence across essential facility and infrastructure maintenance networks throughout Australia and New Zealand.
Management reiterated expectations for financial year 2027 to deliver a step change in revenue and earnings growth over financial year 2026 performance.
