ALYA Stock Price Increases Over 50% Pre-Market: Why It Happened

By Amit Chowdhry ● Mar 24, 2021
  • The stock price of Alithya Group Inc (NASDAQ: ALYA) has increased by over 50% pre-market. This is why it happened.

The stock price of Alithya Group Inc (NASDAQ: ALYA) – a strategy and digital transformation leader with more than 2,200 professionals in Canada, the United States and Europe – has increased by over 50% pre-market. Investors appear to be responding to the company announcing that a definitive agreement has been reached for the acquisition of R3D Conseil, a private Quebec firm that specializes in digital solutions. 

This transaction includes annual minimum volume commitments totaling about C$600 million in combined revenues during the initial 10-year term commercial agreements with Québecor and Beneva (via its subsidiary, La Capitale), two of R3D Conseil’s indirect principal shareholders.

Alithya noted these plans with the acquisition:

– Welcome 600 experienced Quebec-based professionals from R3D Conseil; they specialize in consulting and digital application development in the areas of insurance, finance, government services, healthcare and telecommunications

– Add a back log representing about C$600 million in revenue from value-added service agreements through to 2031 with Québecor and Beneva (created from the amalgamation of La Capitale and SSQ Assurance), to support them in their digital transformation projects in addition to many other clients of R3D Conseil;

– Create more than 350 new jobs in Quebec for digital transformation experts in the fields of insurance and telecommunications;

– Create a Quebec City-based global digital excellence centre for the insurance industry;

– Add Québecor and Beneva (via its subsidiary, La Capitale) as shareholders and business partners;

– See Investissement Québec’s stake increase to approximately 8.7% of Alithya’s share capital.

Alithya is expecting this transformative transaction to generate significant growth. R3D Conseil’s revenues were approximately C$63 million for the last twelve months ending on December 31, 2020. The deal will make an immediate contribution to Alithya’s profitability, notably due to the annual minimum volume commitments and value-added projects resulting from the new commercial agreements.

KEY QUOTES:

“We are delighted to announce these transformative agreements with new strategic customers, and very pleased to welcome 600 seasoned professionals from R3D Conseil, as well as R3D Conseil’s other customers. These people and their expertise are central to this transaction, which expands the reach of Alithya’s operations in Quebec as a digital transformation leader in several essential areas of the economy, including insurance, telecommunications and the public sector. The acquisition will also help create over 350 new jobs in digital transformation, and sustain our commitment to be a trusted advisor for our customers. The long-term commercial agreements and current initiatives will provide our professionals with stimulating projects.”

— Paul Raymond, President and Chief Executive Officer, Alithya

“We believe that the combined strengths of Alithya and R3D Conseil will fast-track our long-term vision, benefiting our customers and our employees. The two companies’ visions and cultures are well aligned, and we believe we will reach our objectives more quickly together. This year, as we celebrate our twenty-five years of building an industry leader, we are pleased to offer our customers broader expertise, and provide our advisors with even more stimulating career opportunities.”

— Claude Levasseur, President and Chief Executive Officer, R3D Conseil

“For Québecor, Alithya, as a Quebec digital transformation leader with international reach, is a logical choice for a long-term partner. Digital transformation services are in heavy demand in all sectors. Thanks to our ten-year partnership with Alithya, we will have guaranteed access to experts in the field to support us in our operations and technological evolution.”

— Pierre Karl Péladeau, President and Chief Executive Officer, Québecor

“This acquisition will benefit both organizations’ customers, as we will have access to a broader talent pool to help us execute our digital transformation projects. Driven to innovate, this Quebec leader has in-depth knowledge of the insurance industry. We can all be proud of its growth.”

— Jean-François Chalifoux, President and Chief Executive Officer, Beneva

“We are proud to once again affirm our support for Alithya by giving the organization the backing it needs to deploy its growth strategy and make this major acquisition happen. With this transaction, Investissement Québec is actively contributing to the development of our digital transformation expertise, as well as helping create many new skilled jobs in a strategic sector undergoing rapid expansion.”

— Guy LeBlanc, President and Chief Executive Officer, Investissement Québec

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.