Here's why Citadel Group Ltd surged 21% today

Citadel Group Ltd (ASX:CGL) has rallied almost 36% since being listed on the ASX late last year.

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On a day where the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has managed to piece together a slight gain, shares of Citadel Group Ltd (ASX: CGL) have skyrocketed just over 21% to be trading at a new high of $3.05.

Citadel, which boasts a market capitalisation of roughly $135 million, is a company that provides education and technology services to help its clients maximise value and business outcomes.

It listed on the ASX late last year and has generated a return of almost 36% since then, which compares very favourably to Vocation Ltd (ASX: VET) and Ashley Services Group Ltd (ASX: ASH), two other education providers which have plummeted in that time.

Today's surge came after the company announced that it has signed a binding agreement to acquire PJA Solutions, which is a leading provider of managed technology services to the local healthcare sector.

It said that the acquisition would enable it to expand in the e-health sector and will create a broader platform on which to continue growing.

Citadel could pay up to $60 million for the business, subject to achievement of agreed financial performance metrics. It will make an initial payment of $20 million ($15 million from cash, $5 million from new shares issued), while two additional payments worth $45 million will be payable across tranches two and three.

Another $15 million is also payable dependent on the achievement of further financial growth objectives. The shares soared after the company said that it expects the transaction to add more than 80% to EBITDA (earnings before interest, tax, depreciation and amortisation) level, while it will be immediately earnings per share accretive.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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