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ST. LOUIS - ESCO Technologies Inc. (NYSE:ESE) announced today it has entered into a definitive agreement to acquire Megger Group Limited from TBG AG for $2.35 billion, according to a press release statement.
The transaction consists of $900 million in cash and approximately $1.4 billion in ESCO equity. The company will fund the cash portion through existing cash reserves and incremental debt, with committed financing secured. The purchase price represents approximately 14 times projected 2026 EBITDA, including synergies. The acquisition is substantial for ESCO, which currently has a market capitalization of $7.94 billion and operates with a moderate debt-to-equity ratio of 0.14.
Megger provides testing, monitoring, and data-driven solutions for utilities and electric infrastructure, serving industrial, transportation, data center, and renewable energy markets. The company operates globally with facilities in the United Kingdom, Europe, North America, and Asia. Its product portfolio includes battery, cable, circuit breaker, relay, transformer, and motor test equipment, along with monitoring solutions and data analytics for grid and power assets.
Megger is expected to generate approximately $590 million in revenue in 2026. The company will be integrated into ESCO’s Utility Solution Group segment. ESCO anticipates realizing approximately $60 million in cost synergies within three years following the transaction’s close. ESCO has demonstrated strong operational momentum, with revenue of $1.17 billion over the last twelve months and revenue growth of 27.86%. The company maintains a Financial Health score rated as "GREAT" by InvestingPro, reflecting solid fundamentals as it pursues this transformative acquisition.
Under the agreement terms, TBG will be subject to certain lock-up provisions regarding its equity ownership in ESCO common stock and will receive nomination rights for one Board of Directors seat upon closing.
ESCO also disclosed preliminary second quarter 2026 results from continuing operations, including revenue of $309 million, GAAP earnings per share of $1.29, and adjusted earnings per share of $1.91. The company plans to report complete second quarter results after market close on May 7, 2026. Investors have responded positively to ESCO’s strategic initiatives, with the stock delivering a 108.58% return over the past year and a 63% gain year-to-date. According to InvestingPro analysis, which offers 14 additional ProTips for ESE, the company has maintained dividend payments for 18 consecutive years. For deeper insights into ESCO’s acquisition strategy and growth prospects, investors can access the comprehensive Pro Research Report, available for ESE and 1,400+ other US equities.
The transaction requires regulatory approvals. J.P. Morgan Securities and Stephens Inc. served as financial advisors to ESCO, while Rothschild & Co advised Megger and TBG.
In other recent news, ESCO Technologies reported strong financial results for the first quarter of 2026, surpassing analyst expectations. The company achieved an adjusted earnings per share (EPS) of $1.64, exceeding the forecast of $1.50. Revenue also outperformed projections, reaching $289.6 million compared to the anticipated $279.52 million. Additionally, Deutsche Bank initiated coverage on ESCO Technologies with a Buy rating and set a price target of $350.00. The firm anticipates sustained high-single-digit sales growth driven by commercial original equipment, Navy contracts, and grid infrastructure. Deutsche Bank also expects margin expansion due to volume leverage, pricing, and business transformation efforts. These developments highlight the company’s recent progress and positive outlook from analysts.
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