Renew Holdings acquires water-focussed engineering outfit J Browne

Engineering services group Renew Holdings has agreed to acquire water-focussed engineering outfit J Browne Group for a cash consideration of £29.5m.

Renew said on Friday that the cash-free/debt-free acquisition would be funded by a combination of cash and its existing revolving credit facility with HSBC and Natwest and highlighted that post-acquisition, it would continue to have a net debt/earnings before interest, tax, depreciation and amortisation ratio of "significantly less" than 1x.

The AIM-listed group also stated J Browne was "an excellent strategic fit", adding material scale to its water business, bringing new water clients into the group and looking set to be immediately earnings enhancing and deliver high single-digit earnings accretion on a full-year basis.

Chief executive Paul Scott said: "This market offers attractive long-term growth opportunities underpinned by committed regulatory spend and is a sector we understand well from our established relationships in other water regions.

"We have known Jeremy and his team for many years and have tracked how they have successfully grown a business with an excellent reputation for directly delivering reliable engineering services to a number of water companies across the south of England, including Thames Water, the largest in the UK."

In terms of recent trading, Renew added that group trading for the first half of the current year was expected to be ahead of the previous year and in-line with management expectations, with the UK's latest national lockdown not having any material impact on trading as the group continued to experience continuity in demand for its services across all markets.

Net debt and cash generation were also said to be in line with expectations.

As of 0825 GMT, Renew shares were up 6.02% at 564.0p.