02:05 PM EDT, 07/04/2024 (MT Newswires) -- CGI is acquiring Celero, a joint venture providing IT solutions to Canadian credit unions and financial institutions, from Credit Union Central of Manitoba, SaskCentral, and Alberta Central.

National Bank's take is that this is a small tuck-in acquisition (only 150 people coming on board) that fortifies CGI's market position in Canada. Analyst Richard Tse estimates the deal size is small and likely in the neighborhood of ~$40 - $70 million.

National Bank also notes that with ~$2.8 billion in available liquidity and a low leverage ratio of 0.4x (Net Debt/TTM EBITDA), CGI has ample financial flexibility to pursue acquisitions. "With 25k potential targets in its pipeline, CGI has 1.5k active prospects (i.e., began diligence process)." It is also estimated that a fifth of those in the diligence process are IP-based services. Management noted during National's annual Quebec Company Conference that investors should expect those acquisitions will be accretive (to EPS), consistent with past transactions, Tse adds.

"All in, while small, we see this acquisition as consistent with the "buy" part of CGI's growth strategy."

Maintain Outperform rating and $175 target.

.

Price: 139.20, Change: +1.30, Percent Change: +0.94