InvoCare Limited (ASX: IVC) announced two more acquisitions to the market late on Friday. Both acquisitions are located in the South Island of New Zealand.
The market-leading funeral company announced that it has entered into unconditional sales agreements to acquire the business and assets of Hope & Sons Funeral Directors in Dunedin and a conditional sales agreement for Whitestone Funerals in Oamaru.
InvoCare said that both of these acquisitions are due for completion on 22 June 2018.
Hope & Sons Funeral Directors operates from six locations in the Dunedin area, it provides around 650 funeral services and 470 cremations each year which generates revenue of approximately NZ$5.8 million. It has operated in the area for more than 130 years through five generations of the family.
Whitestone Funerals has served the local community for 140 years. It provides roughly 130 funerals and 90 cremations each year, this generates around NZ$1 million of revenue each year.
InvoCare believes these acquisitions are a good fit because it opens up new opportunities and complements its existing operations in the South Island located in Christchurch, Nelson and Blenheim.
Martin Earp, the CEO and Managing Director of InvoCare, said "We welcome Hope & Sons Funerals Directors and Whitestone Funerals' employees into the InvoCare family. As well-established and reputable businesses, they provide us with the opportunity to expand our presence into a new regional market in the South Island of New Zealand."
Although the combined revenue from these two businesses isn't a huge deal for InvoCare, it should be at least a 1% boost of revenue onto the FY19 result.
Foolish takeaway
It's currently trading at 23x FY19's estimated earnings. This is quite pricey for what will be a slow-and-steady grower. However, management believe that the company can get back to 10% long-term earnings per share (EPS) growth after it has finished refurbishing its locations.
The company is certainly showing Propel Funeral Partners Ltd (ASX: PFP) that it isn't afraid of making more acquisitions.
If I didn't own shares I'd be okay buying a small parcel today, but it could go down after announcing its result in August with the amount of short interest.
