Saunders to Acquire Aqua Metro for Up to A$30 Million, Boosting FY2026 Earnings

Strategic Acquisition in Water Infrastructure

Saunders International Limited (ASX, SND) has revealed plans to acquire Aqua Metro Pty Ltd, a specialist in water sector services, for up to A$30 million. The deal, announced on 15 July 2025, involves a combination of cash and equity payments, with an earn-out component tied to Aqua Metro's earnings before interest and taxes (EBIT) performance over the next two fiscal years.

This acquisition marks a significant step for Saunders as it seeks to deepen its footprint in the water infrastructure market, a sector experiencing sustained growth driven by population increases, ageing assets, and heightened government investment. Aqua Metro’s expertise in design, engineering, and project delivery complements Saunders’ existing infrastructure services, promising a more comprehensive end-to-end offering.

Financial and Operational Highlights

Aqua Metro boasts a strong order book valued at approximately A$411 million and a pipeline exceeding A$1.4 billion, underpinning future growth prospects. The company is forecast to generate A$102 million in revenue and A$8.2 million EBITDA in FY2025, with expectations to grow to A$135 million revenue and A$11 million EBITDA in FY2026. These figures highlight the stable, annuity-style revenue model derived from long-term agreements with utilities and government agencies.

The acquisition is structured with an initial payment of A$11 million in cash and A$7 million in equity, followed by an earn-out of up to A$12 million based on performance metrics. Funding will be sourced through a $5 million institutional placement, $8 million drawn from a $10 million debt facility with the Commonwealth Bank of Australia, and Saunders’ cash reserves.

Strategic and Cultural Fit

Beyond financial metrics, the acquisition is underpinned by a strong cultural alignment and an established relationship between the two companies. Aqua Metro’s Victoria-based management team, including CEO Manish Pancholi who will join Saunders’ senior leadership, will remain post-acquisition to ensure continuity and operational excellence. This continuity is expected to facilitate a smooth integration and preserve client relationships.

The deal also supports Saunders’ geographic expansion into key growth markets, particularly within Victoria, Queensland, and New South Wales, where water infrastructure investment is robust. Aqua Metro’s presence on major water authority panels and its diversified customer base provide Saunders with significant cross-selling opportunities.

Risks and Conditions

Despite the promising outlook, Saunders has flagged several risks inherent to the acquisition. These include potential delays or failure to complete the transaction, reliance on vendor-provided information which may be incomplete or inaccurate, and challenges in integrating Aqua Metro’s operations. Additionally, the retention and renewal of key customer contracts remain critical to sustaining revenue streams.

The transaction is subject to customary closing conditions, including regulatory consents and no material adverse changes in Aqua Metro’s business prior to completion. Saunders is currently consulting with the ASX regarding compliance with listing rules, with completion anticipated in the first quarter of FY2026.