HomeServe (HSV) £11.60

Gain to date: 71.8%

Original entry point: Buy at 675p, 24 March 2022

Home repair services group Homeserve (HSV) has accepted a £12offer from Brookfield Asset Management. With a slight chance of another institution making a counterbid for the group, we still think it is worth sitting tight and waiting for the situation to play out, with the shares trading a smidge below the Brookfield bid.

This represents a more than 70% uplift to the 675p level at which Shares recommended buying.

The deal makes sense for both parties involved. Homeserve is a non-cyclical business with recurring and reliable profit streams and cash flows; with high teens operating margins (17%) and returns (18%), and a significant ability to deploy capital into existing and future growth ventures.

For Brookfield there are material synergies on offer with the fund’s utility assets, likely with in-house policy books which could be merged with HomeServe.

There are additional potential synergies with a Homeserve lookalike, Enercare, which Brookfield acquired for $4.3 billion in 2018.

Tommy Breen, chairman of Homeserve, said: ‘The offer from Brookfield recognises the quality of our business, our people and our future growth potential, and allows shareholders to realise their investment at an attractive valuation.’

SHARES SAYS: This looks a done deal but worth waiting to find out. 

‹ Previous2022-05-26Next ›