Infrastructure company Cardno climbs after hinting M&A transactions might be on the horizon

Cardno (ASX:CDD) got its shareholders excited about the prospect of potential M&A transactions.

In a short statement to the ASX, the infrastructure and engineering consulting company announced a strategic review “following receipt of a number of unsolicited approaches from interested parties”.

Cardno says the process would assess the company’s strategic options and “alternative strategies available to unlock and enhance value for Cardno shareholders”.

While it said there would be no guarantee anything would come out of the review, it appointed financial and legal advisors and said it would continue to keep its shareholders posted.

Cardno additionally stated its largest shareholder, Crescent Capital Partners supported the review.

The statement was enough to send Cardno as much as 24 per cent higher in the first half hour of trade this morning. Shares are up over 180 per cent in 2021.

Cardno (ASX:CDD) share price chart

What’s been happening at the company?

Shares in Cardno have risen steadily in 2021 since the company released its half-year profit results in February.

The company upgraded its core earnings (EBITDA) guidance for FY21 to come in between $45-$50 million, up from its earlier forecast of $40 million-$45 million.

Cardno has a wide variety of clients which saw differing impacts from COVID-19.

For the half-year to December 2020 the company recorded a 10.9 per cent drop in gross revenue, but a 31 per cent rise in its underlying net operating profit after tax ($14.7 million) and a 17 per cent rise on operating cash flow ($11.8 million).

After suspending dividends during COVID-19, it paid out 1.5c per share for the first half of FY21.

Nearly two years ago, Cardno de-merged its construction materials testing and quality assurance business into a separate ASX company called Integra Group (ASX:ITG). It too has delivered for shareholders in 2021, rising nearly 80 per cent so far this year.