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Price:
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1210p
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Rating:
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Outperform
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04/12/12
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Previous:
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Neutral
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03/08/11
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FACTS: Travis Perkins (TPK) has announced the acquisition of Solfex, a renewable energy distribution specialist which was established in 2006.
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ANALYSIS: In its last financial year Solfex generated revenues of £21.9m and operating profit of £2.2m, with revenues rising by an average of 179% per annum over the past three years. The initial cash consideration is £8m (0.37x revenues, 3.6x EBIT) with further payments depending on performance (amount not specified).
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DAVY VIEW: While a small, bolt-on deal (less than 0.5% will be added to group revenues), this looks an interesting acquisition of a high margin specialist business at an attractive initial price. Solfex will add to TPK's offering and expertise in the growing renewable energy market segment (technical support is part of the Solfex offering). From the perspective of Solfex, having TPK as a parent can enable the business to maximise its potential.
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