How will the acquisition of Investiga boost ALS (ASX:ALQ) growth?

March 08, 2021 09:17 AM AEDT

Ashish

Financial Journalist

Ashish - Financial Journalist
655 Posts
Ashish is a Financial Journalist with an experience of nearly 9 years in the field of economy, stock market and foreign affairs. He has also spent a few years in the corporate sector. A mechanical engineer with post-graduation in marketing and operat...
Follow Ashish Follow

Source:Roman Zaiets ,Shutterstock

Summary

ALS Ltd (ASX:ALQ) is set to acquire Investiga, a pharmaceutical testing business.

Investiga would be integrated into its existing Life Sciences network with a focus on boosting its growth in the US.

Investiga’s acquisition significantly boosts the company’s presence in the pharmaceutical market.

Are You Looking for Compelling Stock Ideas from Diverse Sectors? Get Access to Kalkine's Investor/Resource Reports on a 7 days’ Free Trial.

ALS Ltd (ASX:ALQ) on Monday announced the acquisition of Investiga, a pharmaceutical testing business with operations in Brazil and the east coast of the US. The acquisition would be done for an undisclosed amount, which is eleven times adjusted FY2020 EBITDA, ALS said in its latest update. Investiga reported a revenue of A$20 million in FY2020.

Image Source: © Cammeraydave | Megapixl.com

ALS, the global testing, inspection and certification business, said that Investiga would be integrated into its existing Life Sciences network with a focus on boosting its growth in the US.

What management says

Commenting on the acquisition, Managing Director and CEO, Raj Naran said that boosting the Life Sciences division was a key part of ALS strategy and Investiga would significantly enhance the company’s presence in the pharmaceutical market. ALS has a strong track record of integrating acquisitions into its Life Sciences network and Investiga provides it with the platform to grow the cosmetic and personal care offering, particularly in the US, Naran said.

Outlook

Even amid the uncertainty triggered by the COVID-19 pandemic, ALS traded resiliently in the third and early fourth quarter. Life Sciences volumes remained stable as laboratories provided their essential services to clients in major markets. The commodities division has started to benefit from the improving cycle. Geochemistry sample flows increased by 13 per cent in Q3 FY21 and the momentum is expected to continue into early Q4.

Image Source: © Cammeraydave | Megapixl.com

Major miners along with junior and intermediate miners contributed to this growth, although proportionally unchanged from late Q2 FY21. In the Industrial division, Tribology had seen some improvement in the third quarter, while the trading environment for Asset Care remained challenging. The balance sheet was strong with in excess of A$600 million of liquidity and a leverage ratio of 1.7 times as on 31 January 2021.

Stock performance

On Friday, 5 March 2021, the shares of ALS closed at A$9.49, up 0.040 points, or 0.42 per cent, against the previous closing on Thursday, 4 March 2021.