ASX-listed traffic management operator Avada Group is back on the acquisition trail, inking a binding agreement to pick up the assets and business operations of STA Traffic Management.
The transaction was pitched to potential investors on Tuesday alongside a $6 million capital raise via a two-tranch institutional and condition placement to fund the $7.6 million acquisition. Avada’s directors have committed to subscribe for the $1.2 million conditional placement.Jason South The raise, shepherded by Unified Capital Partners and Morgans, was priced at 60¢ a pop, representing a 27.7 per cent discount to the last close price and a 21.8 per cent discount to the three-month volume weighted average price.
A presentation seen by Street Talk positioned STA as one of the top five traffic management companies in Victoria, with 250 traffic controllers and 83 traffic management vehicles. The company pulled in $24 million in revenue at a 23 per cent gross margin and EBITDA of $2.8 million in the 12 months to April 2023.
Avada, which added Victorian traffic management company Construct Traffic in August 2022 for about $30 million, expects to see synergies and integration benefits flowing from the acquisition, alongside increasing scale in the Victorian market. The expected financial impact is an additional $2.8 million to Avada’s forecast $22 million group EBITDA in FY24.