APi Group Corporation (NYSE: APG) witnessed a notable surge of 5.01% in its stock value during the extended trading session on Friday, reaching the mark of $40.00. The stock concluded the regular session with a rise of 1.09%, settling at $38.09. The announcement of APG's upcoming financial report this week aligned with the notable surge in the stock price.
APi Group (APG) intends to release its financial results for the three months that ended on March 31, 2024, prior to the market opening for business on Thursday, May 2, 2024. Additionally, Elevated Facility Services Group, a renowned supplier of contractual services to a variety of elevator and escalator equipment companies, and APi Group recently concluded a formal agreement to buy Elevated Facility Services Group.
Elevated will be purchased by APG for around $570 million in cash from a firm run by L Squared Capital Partners, subject to standard adjustments such as working capital. This acquisition will augment APi Group's standing as a leading provider of safety services, particularly focusing on imperative, regulation-driven applications.
Elevated's specialization in elevator and escalator services harmonizes with APG's existing expertise in life safety, fire protection, and security, thereby broadening APi Group's market potential by an estimated $10 billion and fostering long-term opportunities for cross-selling.
The majority of Elevated's revenue stems from essential services such as inspections, maintenance, and repairs, fortifying APG's service portfolio and empowering the business to deliver robust financial performance and generate free cash flow amidst variable macroeconomic conditions.
The acquisition is anticipated to contribute nearly $220 million in annual revenue and enhance APi Group's shareholder value creation framework, denoted as "13/60/80," driven by Elevated's commendable EBITDA margin, comprising approximately 70% of revenue from inspections, maintenance, and repair services, coupled with a capital-light business model facilitating robust conversion of adjusted free cash flow.
Post-transaction, APi Group intends to maintain alignment with its long-term net leverage objective of below 2.5x and remains optimistic about the conducive market landscape for expansion through strategic acquisitions.