SYDNEY: Johns Lyng Group (ASX: JLG) announced the acquisition of an 87.5% controlling equity interest in Queensland-based Keystone Group – one of Australia’s leading Insurance Building & Restoration Services (IB&RS) businesses.
Keystone services a recurring blue-chip customer base providing insurance repairs, restoration and hazardous material removal through its subsidiaries, Rizon, Remeed, and Corvex.
Over recent years, Keystone has developed a significant commercial insurance arm which is highly complementary to Johns Lyng’s offerings. Keystone’s dedicated team of professionals expertly manage building works on minor to complex commercial insurance projects.
The acquisition strengthens JLG’s IB&RS strategic growth pillar which provides predictable and recurring base line revenue through everyday insurance events. The transaction supports JLG’s position as a market leader and increases its scale and capacity to effectively respond to large-scale catastrophic (CAT) weather events.
In accordance with JLG’s equity partnership model, Keystone’s experienced management team will retain a 12.5% equity stake in the business and Johns Lyng will sell an additional 7.5% equity interest to management post-Completion to ensure ongoing strategic alignment.
Johns Lyng will pay upfront consideration of $44.1m in cash plus $3.6m in JLG fully paid ordinary shares to be issued on completion which is expected in the first half of FY25 (effective 1 July 2024). The Shares will be issued to continuing management to create deep alignment with the broader Johns Lyng Group. Additionally, there is an aggregate earn-out of up to $21.4m, contingent on FY25 and FY26 EBITDA thresholds being achieved by the Keystone business.
The acquisition is expected to be immediately earnings accretive, with an expected contribution to FY25(F) revenue of more than $100m and EBITDA of approximately $9.0m.
Quotes attributable to JLG Australia CEO, Nick Carnell: The acquisition of Keystone Group represents a significant milestone for Johns Lyng as we continue to solidify our position as a leading provider of Insurance Building & Restoration Services in Australia and New Zealand.
Keystone’s defensive growth characteristics, strong reputation and management expertise, coupled with our strategic focus on expanding our BaU capacity and enhancing responsiveness to catastrophic events, positions us well to meet the growing demands of the market.
We are excited to welcome Keystone’s experienced team to the JLG family and look forward to the tremendous value this acquisition will bring to our clients and stakeholders.”
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