Citadel’s recent acquisition strategically sensible

The Citadel Group (CGL), a recent IPO which we discussed in our last monthly review, was a standout performer in May, finishing up 46.8%. CGL is a company that specialises in enabling an organisation’s knowledge capital by integrating systems, people and processes to provide information on an “anywhere-anytime” basis. During the month, the company announced the transformational acquisition of PJA Solutions, a leading provider of managed technology services to the Australian health and pathology sectors. We forecast that this strategically sensible acquisition will increase the company’s EBITDA by more than 80% and will be EPS accretive in the order of 40% (assuming no synergies) in FY16. We rate the CGL management team highly and believe that the company’s pipeline of organic growth opportunities is solid.