Esco to Acquire Megger Business from TBG AG for $2.35B
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 days ago
0mins
Should l Buy ESE?
Esco Technologies announced that it has agreed to acquire the Megger business of TBG AG. Under the terms of the definitive agreement Esco will acquire Megger for total consideration of $2.35B, consisting of $0.9 in cash and Esco equity valued at approximately $1.4B. The cash portion will be funded through existing cash on hand and incremental debt, with committed financing in place. The value represents approximately 14x projected 2026 EBITDA, including synergies. TBG has agreed to certain lock-up provisions with respect to its equity ownership in Esco common stock. Upon closing of the transaction, TBG will have nomination rights for one seat on Esco's board. Megger will become part of Esco's utility solution group segment. Megger is expected to have approximately $590M in revenue in FY26. The combination is expected to realize approximately $60M in cost synergies within the first three years following closing.
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Analyst Views on ESE
Wall Street analysts forecast ESE stock price to fall
1 Analyst Rating
1 Buy
0 Hold
0 Sell
Moderate Buy
Current: 315.150
Low
275.00
Averages
275.00
High
275.00
Current: 315.150
Low
275.00
Averages
275.00
High
275.00
About ESE
ESCO Technologies Inc. is a provider of engineered components and systems for aviation, Navy, defense and industrial customers. The Company is engaged in designing and manufacturing radio frequency (RF) test and measurement products and systems. It provides diagnostic instruments, software and services to industrial power users and the electric utility and renewable energy industries. Its segments include Aerospace & Defense (A&D), Utility Solutions Group (USG), and RF Test & Measurement (Test). The A&D segment primarily designs and manufactures specialty filtration, fluid control and naval products, including hydraulic filter elements, fluid control devices and precision-tolerance machined components used in aerospace and defense applications, naval magnetic signature management systems, naval power control and conversion systems, products and systems to reduce vibration and/or acoustic signatures and otherwise reduce or obscure a vessel’s signature, and other communications.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Customer Benefits: Customers will benefit from this unified approach, gaining access to a comprehensive suite that transforms fragmented data points into actionable insights, enabling asset owners to achieve better investment planning and significant risk reduction, ensuring reliable and efficient network operations.
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- Integration of Megger's Business: As a global provider of testing and monitoring solutions for electric infrastructure, Megger's offerings include battery, cable, and circuit breaker testing equipment, with FY 2026 revenues expected to reach around $590 million, enriching ESCO's product portfolio.
- Upbeat Financial Outlook: ESCO has raised its Q2 adjusted earnings guidance to $1.91 per share and revenue expectations to $309 million, both exceeding FactSet analyst consensus of $1.77 per share and $307.6 million, indicating strong profitability.
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See More
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- Financial Impact Analysis: The acquisition is valued at approximately 14 times the projected 2026 EBITDA, reflecting confidence in future growth, while TBG has agreed to lock-up provisions on its equity in ESCO, indicating trust in the company's value creation.
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See More
