GenusPlus Group's (ASX:GNP) acquisition of MGC Group Holdings created an entry point into the rail sector, which has "significant" growth potential, Euroz Hartley said in a Friday note.
The transaction consideration for the buyout comprises an upfront cash payment of AU$10.3 million and contingent earn-out payments of up to AU$10.5 million, subject to meeting growth targets through 2027. The earn-out payments may be made either in cash or 75% cash and 25% Genus scrip, per the filing.
The research firm said the acquisition may create meaningful additions to the company's pipeline and also short-term earnings once integrated into the business.
The research firm believes the deal is "immediately value accretive" in terms of short-term earnings.
Euroz Hartleys maintained its buy rating while raising its price target to AU$3.31 from AU$3.05.
The company's shares fell 6% on market close.
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