IN BRIEF: Public Policy buys TrailRunner for up to $70 million

Public Policy Holding Company Inc - Washington, DC-based group of advisory firms, specialising in government affairs and public relations - Agrees to buy TrailRunner International LLC, a Texas-based global communications advisory firm, for initial $33 million. On completion, the acquisition is anticipated to be immediately accretive to the underlying earnings. Consideration could rise to $70 million if TrailRunner was to realise more than 25% compound annual profit growth from 2025 through 2029. The initial $33 million payment will be satisfied on completion, which is expected to occur by April 1, by the issue of just under 3.0 million shares at 135.31 pence each, raising $5.0 million and the balance of $28.0 million in cash. To support the financing of the initial cash element, the group has entered into a supplemental credit facility with Bank of America of $24 million.

In addition, says full-year 2024 revenue increased by 11% to $149.6 million from $135.0 million a year prior. Organic growth of 2.7% was the outcome of slower organic growth of 1.2% in the first half, followed by stronger organic growth of 4.1% in the second. Underlying earnings before interest, taxes, depreciation and amortisation increased 3% to $36.1 million and was achieved at a margin of 24.1%.

Believes that in the coming months and years there is a significant opportunity to deploy further significant growth capital into such opportunities to enhance cash generation and better drive long-term shareholder returns. However, also believes the current share price does not support funding these M&A initiatives through the issuance of new equity and, therefore, will consider a proposal by management to adjust the dividend in order to retain more cash within the business.

Current stock price: 134.58 pence, down 0.3% in London on Monday

12-month change: up 19%

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