Vysarn (ASX: VYS) closes A$60m Welltech acquisition as EPS accretion target hits 37%

Vysarn Limited (ASX: VYS) completed its acquisition of Technologies International Group Pty Ltd, trading as Welltech, on September 3 after satisfying the conditions attached to the July transaction. The deal carries total potential consideration of up to approximately A$60 million, including an upfront cash-and-share component and deferred consideration tied to future EBITDA performance.

The original transaction structure included A$37.25 million of upfront cash, Vysarn shares and up to A$10 million of deferred consideration over three years. Vysarn funded the cash component through a fully underwritten A$65.3 million placement completed earlier in the transaction process.

VYS closed September 3 at A$1.005, down 0.99% from A$1.015 on September 2, after trading between A$0.995 and A$1.035. The stock has nevertheless remained about 44% higher year to date despite declining from A$1.10 on August 28.

The completion came on the same day Vysarn disclosed that the separate NewGround acquisition had been delayed and that discussions were continuing with vendors regarding an extension. That distinction matters because Welltech is now completed, while NewGround should still be treated as pending rather than included as a closed transaction.

Why is Welltech potentially so accretive to Vysarn’s earnings?

Vysarn said the acquisition is expected to increase earnings per share by more than 37.3% on a pro forma FY26 basis, using Vysarn’s FY26 NPAT and Welltech’s unaudited FY26 earnings under the company’s stated share-count assumptions.

That is unusually high accretion for an acquisition funded partly through a significant equity issue. Vysarn raised A$65.3 million by issuing about 62.2 million shares at A$1.05 each, so the transaction had to add substantial earnings merely to prevent dilution to EPS.

Management said Welltech’s upfront acquisition valuation equated to about 3.6 times maintainable EBITDA based on unaudited FY26 performance, excluding deferred consideration shares. A low acquisition multiple can create substantial EPS accretion if the acquired EBITDA proves sustainable after integration.

The key word is sustainable. Deferred consideration is tied to EBITDA targets, including A$11 million in the first earn-out year, A$12.5 million in the second and A$13 million in the third. The structure therefore makes future payments increasingly dependent on Welltech continuing to grow earnings.

What does Welltech add to Vysarn beyond another water-services business?

Welltech has operated since 1995 and provides water and sewerage-management services across civil infrastructure, utilities, government and resources. Its three principal businesses are construction water supply, sewer and wastewater bypass operations and water drilling.

Its customer list includes Melbourne Water, Fulton Hogan, NRW Holdings, BHP, Water Corporation, John Holland and Rio Tinto. That broadens Vysarn’s exposure beyond the Western Australian resource-sector work that historically formed a significant part of its revenue base.

The strategic overlap is substantial. Vysarn already operates hydrogeological drilling, test pumping, water consulting, asset management and wastewater-treatment businesses. Welltech extends that platform into additional construction-water and sewer-bypass capabilities rather than creating a completely separate operating division.

This is one reason the acquisition could generate cross-selling rather than merely additive revenue. A client using one Vysarn water-management service can potentially purchase drilling, pumping, bypass, treatment or advisory work elsewhere within the enlarged group.

How much larger has Vysarn already become before Welltech contributes for a full year?

Vysarn reported FY26 revenue of A$140.1 million compared with A$106.5 million in FY25, an increase of roughly 31%. Net income rose to A$15.1 million from A$10.7 million, while basic EPS increased to 2.87 cents from 2.13 cents.

That means Welltech is being layered onto a business already growing strongly rather than being acquired to repair a shrinking base.

The first half of FY26 had already delivered record results, with revenue of A$66.8 million, EBITDA of A$13.9 million and NPBT of A$10 million. Revenue increased 63% and EBITDA 71% from the corresponding period.

The combination therefore raises the bar for FY27. Investors are no longer simply asking whether Vysarn can maintain double-digit organic growth. They also need to see whether the Welltech acquisition can preserve the margins and cash conversion achieved by the existing operations.

Why does the A$65.3 million capital raising still matter after the deal closes?

The placement was priced at A$1.05 per share, only 0.5% below Vysarn’s A$1.055 pre-announcement close and 5.2% above the previous five-day VWAP. That indicated strong institutional demand at the time the acquisition was announced.

The financing added approximately 62.2 million shares, increasing the ordinary share count materially before Welltech consideration shares were issued. Existing shareholders therefore paid a dilution cost in advance to secure the acquisition and strengthen working capital.

That dilution is easier to justify if management delivers the promised EPS accretion. If Welltech performs around the assumptions used in the pro forma calculation, Vysarn’s earnings per share should grow despite the larger share count.

If Welltech EBITDA falls below expectations, the mathematics become less attractive because the equity has already been issued.

What does the NewGround delay change for Vysarn’s FY27 narrative?

NewGround was intended to be another strategic acquisition alongside Welltech, and earlier Vysarn materials suggested that combining both transactions could produce pro forma FY26 EPS accretion exceeding 59%.

That combined figure should now be treated cautiously because the NewGround transaction has not closed and completion has been delayed. Vysarn said on September 3 that it was discussing an extension with the vendors.

The cleaner investment case therefore focuses on what is already certain: Welltech is completed and becomes a wholly owned operating business. NewGround remains optional upside only if revised timing and conditions ultimately lead to closing.

That is a useful distinction for investors because acquisition-heavy companies can quickly accumulate pro forma earnings that have not yet been legally or operationally secured.

Vysarn’s next results will provide the first opportunity to assess actual Welltech contribution rather than transaction modelling. Revenue growth, EBITDA margin, integration costs and working-capital performance will show whether the 37.3% pro forma EPS accretion was a realistic indicator of economic value.