Mining and heavy construction services provider North American Construction Group (NOA) has agreed to acquire DGI Trading Pty Limited for $23.5 million, representing an EBITDA multiple of 3X. The transaction is expected to close on July 1.
This strategic acquisition is part of NOA’s moves to achieve vertical integration of its capital maintenance program, together with diversifying its services.
Australia-based DGI provides production-critical components to the mining sector and has partners in more than 10 countries.
NOA President and CEO Joe Lambert said, “NACG has worked with David (DGI Managing Director) and his team at DGI for many years and have great respect for their skills and the integrity with which they conduct business.” (See NOA stock analysis on TipRanks)
Lambert added, “We welcome the DGI team into our NACG family and are very excited to work together to grow and expand the services provided both externally and internally.”
On June 1, Canaccord Genuity analyst Yuri Lynk reiterated a Buy rating on NOA with a price target of $17.34 (22.6% upside potential).
Lynk commented, “A healthy balance sheet, strong and aligned management team, and modest valuation multiple round out an already attractive investment case.”
Based on 3 Buys and 1 Hold, consensus among analysts is a Strong Buy. The NOA average analyst price target of $15.90 implies 12.5% upside potential.
Shares have almost doubled over the past year.
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