Seven Group Holdings Jumps 8.7% on Acquisition

What happened to the Seven Group Share Price?

Shares of Seven Group Holdings Ltd [ASX:SVW] gained more than 8% in trading today and were up over 10% at one point, hitting a high of $12.45. The share price has since moderated to $12.15

Why did Seven Share Price do This?

The catalyst for the rise was an announcement to buy the remaining stake in equipment hire company Coates Hire for $517 million. The Kerry Stokes controlled company first bought into the business in 2008 and is using existing cash flow and proceeds of its recent sale of its WesTrac Chinese business, to fund the deal.

The market clearly likes the deal, at first glance though it is still subject to waivers being obtained from Coates Hire lending syndicate.

What next for Seven Group Holdings?

Managing Director and CEO of SGH Ryan Stokes, said in a statement:

We are pleased to reach agreement with Carlyle to acquire the shares in Coates Hire we don’t already own.

We have had a long history with the Coates Hire business and believe with the visible market opportunity associated with East Coast infrastructure activity, along with the current performance of the business and management team, the company is extremely well positioned to create value for all shareholders.

The move to full ownership of Coates Hire will enhance SGH’s position as a leading operator of industrial services businesses, with a strong macroeconomic environment and a positive outlook providing the potential for significant opportunities to be realised.

Clearly the company are bullish on the economic outlook for Australia.

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Good Investing,

Ryan Dinse,
Editor, Money Morning


Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

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