Why the Quickstep (ASX:QHL) share price is up 5% today

The Quickstep Holdings Limited (ASX: QHL) share price has climbed 5% higher today on news of an acquisition deal.
The post Why the Quickstep (ASX:QHL) share price is up 5% today appeared first on Motley Fool Australia. –

changing asx share price from acqusition represented by man reaching out to touch acquisition sign

The Quickstep Holdings Limited (ASX: QHL) share price is climbing higher today on news of an acquisition agreement.

At the time of writing, shares in the carbon fibre composites manufacturer are trading up 4.94% to 8.5 cents.

What’s the agreement?

Quickstep has agreed to the terms to purchase Boeing Defence Australia’s aerospace maintenance, repair and overhaul (MRO) capability.

Base in Tullamarine, Victoria, Boeing Australia Component Repairs (BACR) manages a wide range of aircraft structures for both commercial and military use. The company fields recent experience working with Boeing, Airbus, Embraer and Bombardier aircraft. This includes fighter aircraft such as the F/A Hornets, military transport planes C-130J Hercules and helicopter CH-47 Chinooks.

In addition, Quickstep advised it was seeking to expand the scope of MRO work offered. The company hopes to carry out service functions on the stealthy F-35 jet alongside other military and commercial contracts. As key approvals all require major regulatory bodies to be on board, Quickstep is working towards obtaining the certifications needed.

Terms of the deal

Under the purchase agreement, Quickstep will acquire operating assets, inventories and certain contracts from BACR for $2.64 million.

A top tier Australian bank has committed to funding the purchase of a refinanced package for Quickstep’s existing long-term loan. Pleasingly for the company, the rate will be offered at a reduced margin.

Completion of the deal is expected to be at the end of the calendar year, provided Quickstep obtains necessary approvals. It’s anticipated that the acquisition will be positively contributing to earnings per share (EPS) by the second year of operation.

Should BACR terminate the agreement if Quickstep fails to uphold its end of the bargain, a termination fee will apply. This will be payable to BACR for the amount of $2 million.

What did management say?

Commenting on the acquisition, Quickstep CEO Mark Burgess said:

We are delighted to soon be welcoming highly capable aerospace employees from the BACR business to Quickstep. The acquisition of this important national capability aligns well to our business strategy, positions us to grow our defence sustainment business and opens up new opportunities in the high value commercial aftermarket as we move toward post- pandemic recovery.

Boeing Defence Australia, vice president and managing director Scott Carpendale added:

We’re pleased that this agreement will offer Quickstep the ability to grow its unique sovereign capability to the benefit of regional commercial and defence customers. We look forward to continuing to work with Quickstep on new opportunities to increase their support of Boeing customers locally and globally.

Quickstep share price summary

The share price for Quickstep hasn’t been too positive for the past year. Shareholders would have seen their value drop by more than 40% if they bought 12 months ago. However, the Quickstep share price has made a strong recovery in November alone, gaining more than 15% from 7 cents.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Quickstep (ASX:QHL) share price is up 5% today appeared first on Motley Fool Australia.

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