EL7.AI
Mergers & AcquisitionsMedium•9 November 2026•
3 min read

Service Stream raises A$475 million to fund A$975 million purchase of Programmed

Key Facts

1Service Stream agreed to buy Programmed from Persol for A$975 million.
2Service Stream raised A$475 million in equity at an issue price of A$2.03 per share.
3The equity raise includes a A$219 million institutional placement and a A$256 million entitlement offer, at one share for every 4.9 shares.
4The company expects adjusted earnings per share to increase by more than 20% in fiscal 2027 after savings.
5Service Stream is targeting completion around March 1, 2027, subject to approval from the Australian Competition and Consumer Commission and other conditions.

Service Stream announced on Nov. 9 an agreement to buy Programmed from Persol for A$975 million, saying the deal would be partly funded by a A$475 million equity raise at an issue price of A$2.03 per share. The funding combines an equity issue, an increase in credit facilities and the use of some existing cash, alongside the acquisition of the target. The deal implies an enterprise value of A$1,092 million, including Programmed’s A$117 million in lease liabilities. The company said the deal would increase pro forma adjusted earnings per share by more than 20% in fiscal 2027 after savings, and by a mid-single-digit percentage before then. Completion targeted around March 1, 2027, remains subject to approval from the Australian Competition and Consumer Commission and other customary conditions.

The equity raise comprises a A$219 million institutional placement and a A$256 million accelerated non-renounceable entitlement offer, allowing one new share for every 4.9 existing shares. The issue price for the new shares is A$2.03 per share, according to the company’s announcement summary. The funding is supplemented by a A$490 million drawdown from credit facilities, after their size was increased from A$395 million to A$895 million. Service Stream will also use A$50 million of existing cash to fund the acquisition. The plan therefore relies on multiple funding sources, including equity, borrowing and available liquidity.

The purchase price could fall by up to A$25 million if Programmed does not meet the specified earnings before interest, taxes, depreciation and amortization threshold. Service Stream estimates initial annual cost savings of about A$30 million. Based on last-12-month EBITDA through June 2026, the enterprise value-to-EBITDA multiple is 7.4 times before savings and 6.1 times after them. The company links these savings to its estimates of the deal’s impact on earnings per share. Those estimates are based on completion of the deal and delivery of the assumed savings.

The company expects pro forma revenue for the combined group to reach about A$6,155 million in fiscal 2026. In the fiscal year ended June 30, 2026, Service Stream recorded EBITDA from operations of A$163.4 million, up 11.8% from the comparable period. The group’s adjusted EBITDA margin rose to 6.6%, an increase of 60 basis points. Adjusted net profit after tax was A$81.1 million, up 18.4% from the comparable period. The company ended the fiscal year with net cash of A$80.7 million.

Managing Director Lee McKinder said the company expanded its target markets in fiscal 2026 and secured and began delivering several new contract agreements in the defense, water and industrial sectors. The proposed acquisition of Programmed comes as the group expands, while Service Stream estimates the deal will increase pro forma adjusted earnings per share in fiscal 2027. Completion expected around March 1, 2027, depends on approval from the Australian Competition and Consumer Commission and satisfaction of other customary conditions. The possibility of a price adjustment remains if Programmed fails to meet the specified earnings threshold. The company says initial savings are estimated at A$30 million a year.