Savaria Corp.’s shares get a lift

Savaria Corp.’s shares have risen to reflect its acquisition of Sweden-based Handicare Group.


Savaria’s acquisition is in an industry it knows well.

Savaria’s acquisition of Handicare Group is in an industry it knows well. The company “designs, manufactures, distributes, and installs accessibility equipment, such as stairlifts for straight and curved stairs, vertical and inclined wheelchair lifts, and elevators for home and commercial use”. Savaria also manufactures medical beds, medical equipment for safely handling patients and making vehicles wheelchair accessible. It has direct sales offices in North America, Europe, Australia and China. It operates plants across Canada, in the US, China, Italy and Britain.

Handicare Group, or HG, provides 45,000 curved and straight stairlifts a year as well as transfer, lifting and re-positioning aids and vehicle adaptations. It sells its products in 40 countries. Handicare manufactures and assembles its products at sites across North America, Asia and Europe.

Savaria president and chief executive officer Marcel Bourassa said: “People throughout the world are aging and in need of equipment that gives them independence and ways to stay in their homes longer.”

They’re in the same industry

Together, Savaria and HG had pro forma combined revenue of $671 million a year. Their adjusted underlying earnings came to $96 million. The new Savaria expects to earn significantly more for several reasons.

First, their complementary product offerings create cross-selling opportunities. Second, their sales network extends to over 1,000 dealers and 30 direct sales offices. Third, they can become more efficient by sharing best practices in technology and factory automation by joint research and development initiatives. Fourth, Savaria expects the acquisition to produce synergies of $18 million within 24 months of closing. It expects to realize half these synergies in the first 12 months.

Savaria writes, “the acquisition will be immediately accretive to Savaria’s pro forma combined . . . free cash flow per share.”

Savaria can pay for the acquisition. It lined up new credit facilities of $600 million. What’s more, the company has issued subscription receipts. We’ll continue to watch how Savaria executes the acquisition. As it becomes a larger company, we may raise its quality rating.

Savaria Corp. (TSX—SIS) remains a buy for further long-term share price gains and small dividends.

This is an edited version of an article that was originally published for subscribers in the February 12, 2021, issue of The Investment Reporter. You can profit from the award-winning advice subscribers receive regularly in The Investment Reporter.

The Investment Reporter, MPL Communications Inc.
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