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Why NRW Holdings shares rocketed 14% to a record high today

Kenneth Hall
Rocket soaring through the sky

NRW Holdings Limited (ASX: NRW) shares have surged to a record high this morning after returning to trade with a $116.4 million acquisition in its pocket. 

Why are NRW Holdings shares rocketing?

NRW Holdings shares have jumped as much as 14% higher in early trade as investors reacted to the group’s recent acquisition. The NRW share price has since dipped slightly but is still currently up 9.61% to $3.08 per share at the time of writing.

The group will acquire 100% of BGC Contracting for an equity value of $116.4 million and an implied enterprise value of $310 million.

BGC Contracting provides services to the resources, energy and infrastructure sectors across three businesses – Mining, Construction and DIAB Engineering.

NRW Holdings shares are going bananas this morning following the news as investors expect further earnings growth.

BGC Contracting has an existing $1.5 billion order book and provides significant scale-up opportunities for NRW. The combined entity will have $4.0 billion in orders with $2.2 billion scheduled for delivery in FY 2020.

The Aussie engineering group announced a $120 million placement yesterday to fund the acquisition. The group completed its placement this morning at a price of $2.85 per placement share.

That equity raising can be considered a huge success and NRW shares are reflecting that this morning. The placement funds raised were actually at a premium to NRW’s $2.84 per share valuation prior to Thursday’s announcement.

How has NRW performed in 2019?

This morning’s early share price increase has been just one of many for the group this year.

On current prices, NRW shares have almost doubled from their $1.60 valuation in early January. Even more impressively, the company’s shares are up more than 5,000% since the start of 2016.

NRW isn’t the only stock surging higher today as the S&P/ASX 200 Index (INDEXASX: XJO) raced out of the blocks this morning.

The benchmark index set a new record high of 6,893.70 points just after the open and is up 0.28% at the time of writing.

The post Why NRW Holdings shares rocketed 14% to a record high today appeared first on Motley Fool Australia.

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Motley Fool contributor Kenneth Hall 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 Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019