AUB Group Limited (AUB)
BUY

AUB - Stock Update

 9 May 2022
Sector: Financials

AUB came out with an investor presentation this morning with regards to the Tysers acquisition and capital raising.

Mentioned within the announcement was:

• AUB has agreed to acquire 100% of Tysers for A$880m (GBP 500m).
• The deal price implies 12x EBITDA and has potential for an additional A$176m deferred payment.
• Funding will be completed through a A$350m underwritten equity raising, A$176m placement to vendors of Tysers and a new A$675m multi-currency debt facility.
• Estimated run rate synergies of A$25m in incremental EBITDA.
• 30% underlying EPS accretion on pro forma CY22 basis.
• Not looking to change dividend policy because of the acquisition.

Momentum has continued to grow throughout CY22 for AUB which reinforces our BUY rating. The acquisition has been said to provide cost synergies and EPS accretion once materialized and provides AUB with the ability to enhance and differentiate broking offerings.

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Company Overview

AUB Group operates in Australia and New Zealand and comprises of insurance brokers and underwriting agencies.

AUB has displayed an impressive recovery in group profitability over the past few years. Net profit guidance was slightly upgraded earlier this year to $72-74 million from $70-73 million. Along with this, the recent announcement of the Tysers acquisition provides potential benefits for the company. Overall, this supports our BUY rating.

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