View on Johns Lyng Group Ltd (JLG)
Hi James and team, Did your view on JLG change with the recent takeover bid? Where do you see the stock in a short and medium term? Thanks in advance.
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Answer
Hi Dario,
As you highlight, Pacific Equity Partners (PEP) has made a non-binding takeover bid for Johns Lyng Group (JLG), with the price still a mystery – PEP has secured exclusive due diligence access until July 11, with a binding offer expected thereafter. Its very unusual for such announcements to come without an indicative purchase price which not surprisingly has led to plenty of speculation.
JLG is a cyclical business where work/earnings are linked heavily to weather related events, which have been benign. We can see why private equity has interest at this point in the cycle, though we think $3.50 would be a more realistic level.
- We are neutral/mildly bullish towards JLG with the stock ~$3.10 looking to exit into strength ~$3.50 if it were to get there.
