Broker snap: Panmure upbeat about Canadian purchase at Keller

11th Jun 2013 11:08

Panmure Gordon has hailed Keller's acquisition of North American Piling, but has kept its 'hold' rating for the FTSE 250-listed ground engineering specialist following a decent run this year.The company announced on Tuesday that it has acquired North American Piling, a Canadian foundations business headquartered in Alberta, for an initial £144 plus a maximum deferred £58.5m. The move adds annual revenue of £150m and £24.4m in operating profit.The acquisition is being part-funded by a placing to raise £58.7m with the balance being from debt.Panmure analyst Andy Brown said: "The business being acquired has a strong recent record and appears to be well placed in the Alberta/oil sands/energy segment. Margin sustainability will be a key question but historical group North American margins have hit double digits."He said that his initial estimates see the purchase being 10% enhancing to earnings this year and 12-15% next year. This suggests earnings per share of around 68p in 2013, rising to 80p in 2014.Brown said: "A large Canadian piling acquisition that enhances presence in the region and increases group exposure to the energy sector looks to be a good move. "[...] Fundamentally we are positive on the group's service offering and market positioning but with a full valuation and share price trading at two-year price/relative highs we thought the price had moved far enough. This explains our current 'neutral' stance."A 900p target price for the shares has been maintained.The stock was up 2.21% at 926p by 11:16, having risen over a third by the start of 2013.