Ashtead Technology Expands with Acquisition of Seatronics and J2 Subsea

On Thursday, Ashtead Technology Holdings plc (LON:AHT) announced its acquisition of Seatronics Limited and its subsidiaries, alongside J2 Subsea Limited, for a total cash consideration of £63 million. These companies are recognized for their subsea electronics and ROV tooling rental and services. The acquisition, sourced from Acteon Group Operations (UK) Limited, aims to bolster Ashtead's survey and robotics capabilities, driving international growth.

This deal is projected to be mid-to-high single-digit earnings accretive in the first full year of ownership, anticipating a return on invested capital exceeding Ashtead's average cost of capital. The pro-forma leverage ratio for Ashtead Technology is estimated at approximately 1.8 times as of June 30, 2024, with expectations of reducing to below 1.5 times by the end of 2025. Completion of the acquisition depends on standard closing conditions, including approval from the Competition and Markets Authority.

Seatronics and J2, with operational bases in Singapore, UAE, UK, and US, have been aligned with Acteon Group for over a decade, primarily serving the offshore energy sector. The acquisition will expand Ashtead Technology’s rental fleet, adding over 7,000 proprietary assets along with a skilled workforce possessing extensive domain knowledge. Notably, 55 percent of Seatronics and J2’s revenue comes from outside Europe, emphasizing their international presence.

To finance the acquisition, Ashtead Technology has augmented its revolving credit facility by £70 million, totaling £170 million, supplemented by an additional uncommitted £40 million accordion facility. This enhancement is backed by banking partners including ABN Amro, Citi, HSBC, Virgin Money and RBS.

The Board of Ashtead Technology is positive about the medium-term prospects for Seatronics and J2, planning to invest around £10 million in the fleet during the first year of ownership. This investment is projected to yield a high teens percentage increase in EBITA throughout the investment period, ultimately aligning margins with the group's levels over time.

Allan Pirie, CEO of Ashtead Technology, expressed excitement regarding the acquisition, highlighting its strategic fit and the anticipated enhancement of the company's international footprint and customer relations. Brice Bouffard, CEO of Acteon, also shared confidence in the growth and value Seatronics and J2 will contribute to Ashtead’s global clientele.

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