Good acquisition which makes this HRL more interesting now. I...

Good acquisition which makes this HRL more interesting now.

I previously thought their roll-up strategy in environmental services was too small in potential scope, in that the available market was probably limited to Aust/NZ and that they'd end up a mid-tier player in this space given established competition, hence not worth the risks of a roll-up. But this horizontal move into food/agriculture testing services changes the game, illustrating both a broader range of market sectors available to them and potentially bigger scale than Aust/NZ with the China link.

The question I'd like to understand better is to what extent the honey/dairy testing market has matured already. NZ's had an economic boom in recent years from exports to China so the vendor might be selling out after the rapid growth phase has settled. They are taking mostly cash not shares if I read that right, equal to 70% of the initial $19m and then a further earn out in cash of $11m.

Nevertheless that's a valuation question needing further consideration, but certainly the strategy question mark has been answered in quite a positive way.