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Highlights:

  • Saunders International to acquire Aqua Metro in staged deal valued up to AUD 30 million.
  • SND forecasts EPS accretion in FY26 based on Aqua Metro’s projected earnings.
  • SND to fund acquisition via placement, new debt facility, and cash reserves.

Saunders International Limited (ASX:SND) has entered into a Share Sale Agreement to acquire 100% of Aqua Metro Pty Ltd and associated entities. The total consideration for the transaction is up to AUD 30 million, including an upfront payment and a performance-based earn-out. The acquisition marks Saunders’ entry into the water infrastructure sector and supports the company’s broader strategy of diversifying its infrastructure capabilities.

Aqua Metro is a privately owned, Victoria-based company delivering water infrastructure services to urban and rural regions. Its services span mechanical, hydraulic, civil, and water engineering, primarily under long-term project and program agreements with utilities and government clients. Aqua Metro currently holds framework positions with four water authorities, with agreements extending through to at least 2028.

The acquisition includes an upfront consideration of AUD 18 million, comprising AUD 11 million in cash and AUD 7 million in Saunders shares. The shares will be issued in two tranches one under Saunders’ existing ASX Listing Rule 7.1 capacity and the remainder subject to shareholder approval at the upcoming Annual General Meeting. An additional earn-out payment, capped at AUD 12 million, may be payable based on Aqua Metro’s average EBIT across FY25 and FY26, and will include both cash and equity components.

Aqua Metro’s forecast revenue for FY25 is approximately AUD 102 million, with expected EBITDA of AUD 8.2 million. For FY26, the business is budgeting revenue of around AUD 135 million and EBITDA of AUD 11 million. The acquisition is expected to be earnings per share (EPS) accretive for Saunders in FY26, based on these projections.

The transaction will be funded via a AUD 5 million institutional placement, an AUD 8 million drawdown from a newly established AUD 10 million debt facility with the Commonwealth Bank of Australia, and Saunders' existing cash reserves. The placement was made to existing substantial shareholders Ahrens Group and Anacacia Capital. It will result in the issuance of approximately 7.69 million new shares, which will rank equally with Saunders' existing shares upon issue.

The debt facility is structured as a three-year term with a seven-year amortisation period, secured against Saunders' property and assets. Interest will be charged at a margin of 2.7% above the BBSY rate, with standard quarterly covenant reporting requirements in place.

Aqua Metro will operate as part of the Saunders Group post-completion, retaining its existing leadership and workforce of over 100 employees. The company's operations will continue to be led from Victoria, with Chief Executive Officer Manish Pancholi joining the Saunders leadership team as Executive Vice President, Saunders Aqua Metro. Saunders has indicated that the integration will prioritise continuity and aims to maintain Aqua Metro’s established customer relationships and operational approach.

The Share Sale Agreement remains subject to customary closing conditions, including third-party consents, no material adverse changes, and certain procedural requirements. Subject to satisfaction or waiver of these conditions, completion is targeted for the first quarter of FY26.

Saunders’ Managing Director and CEO, Mark Benson, noted that the companies had previously collaborated on projects, and the acquisition reflects alignment in service offerings and organisational structure.

SND trading at 2.67% higher at AUD 0.77 per share as on 15 july 2025.