Avante Logixx acquisition of LVS gets thumbs up at Paradigm

Avante Logixx’s (TSX:XX) acquisition of LVS is getting the thumbs up from Paradigm Capital analyst Spencer Churchill.

On March 13, Avante Logixx signed a binding share purchase agreement to purchase all of the issued and outstanding shares of Toronto-based high-end custom residential security and automation services integrator, LVS Inc. The total consideration for the purchase was $3.9-million.

“This is an exciting opportunity for me and my team at LVS to join with Avante in building a world-class security company. I believe the combination of Avante, Into Electronics and LVS creates a formidable group with an impressive diversified security offering,” said LVS founder Yoram Dushek.

Churchill says he likes the acquisition because he believes the deal should be, immediately accretive, because he deems the 1.4x revenue price tag fair, and because the pickup removes a key competitor.

“Very similar to the INTO acquisition, LVS is meaningful in size, but is another bolt-on acquisition, which should make for an easy integration. There are some very obvious synergies that should be realized relatively quickly, including eliminating duplicate overhead (finance, etc.), while we believe Avante has sufficient space at its headquarters to house all the remaining LVS staff (the lease on its office has a short term remaining),” said Churchill.

In a research update to clients yesterday, Churchill maintained his “Buy” rating and $0.65 one year target price on Avante Logixx, implying a return of 55% at the time of publication.