Hercules plc buys 70% of Lyons Power Services – terms, valuation and strategy
Hercules plc (AIM: HERC) has snapped up a 70% stake in Lyons Power Services Ltd (LPS) for £702,800, paid half in cash and half in new Hercules shares. The remaining 30% stays with the current owner manager, who will keep running the business. It is a modestly sized bolt-on, but very much on-message with Hercules’ push into the power and energy infrastructure market.
The logic is clear. The UK’s grid build-out is accelerating, with National Grid flagging around £58 billion of investment to extend and modernise transmission and distribution networks. Hercules moved into this arena with the June 2025 acquisition of Advantage NRG, a supplier of overhead linesmen. Adding LPS deepens that position with specialist substation and switchgear services.
Key numbers from the RNS
| Stake acquired | 70% of Lyons Power Services Ltd |
|---|---|
| Total consideration | £702,800 (50% cash, 50% shares) |
| Cash component | £351,400 (from existing cash resources) |
| Share component | £351,400 via 965,915 new shares at 36.38 pence |
| Lock-in | 12-month lock-in, then 12-month orderly market |
| LPS revenue (y/e 31 Jan 2025) | £1,387,000 |
| LPS profit before tax | £287,000 |
| LPS net assets | £245,000 |
| Implied 100% equity value | ~£1,004,000 |
| Implied price-to-revenue | ~0.72x |
| Implied price-to-PBT | ~3.5x |
| Total shares post-admission | 80,585,543 |
| New shares issued | 965,915 |
| Estimated dilution | ~1.21% |
| Admission date (expected) | On or around 17 October 2025 |
Why Hercules is leaning into power and energy infrastructure
Hercules is a technology-enabled labour supplier to UK infrastructure and construction. Power is a natural adjacency, and one where demand is set to run hot for years. With grid connections, electrification and resilience all in focus, National Grid’s proposals point to a multi-year upgrade cycle.
In June, Hercules acquired Advantage NRG, which supplies skilled overhead linesmen. Today’s deal adds complementary capability in substations and switchgear – the brains and switching of the network, rather than the wires in the sky. It also broadens customer access across manufacturers and Distribution Network Operators (DNOs).
What Lyons Power Services actually does
Lyons Power Services provides specialist power infrastructure services to big-name clients, including manufacturers like Siemens and DNOs such as SSE. The work spans transmission, distribution and energy markets in the UK and overseas.
Core services include installation and commissioning of switchgear and substation systems from 415V to 132kV, factory and site testing through to entry into service, maintenance and repair of switchgear from 415V to 33kV, and Senior Authorised Persons operating private networks up to 33kV. In plain English: LPS makes sure substations and switchgear are installed correctly, tested rigorously and kept working safely.
Valuation take – is Hercules getting a good deal?
On the numbers disclosed, it looks sensible. Paying £702,800 for 70% implies a total equity value of roughly £1.00 million. Against LPS’s last-year revenue of £1.39 million and profit before tax of £287,000, that equates to about 0.72x sales and roughly 3.5x PBT. The PBT margin sits around 20.7% – healthy for a specialist services business.
We do not have EBITDA (earnings before interest, tax, depreciation and amortisation) for LPS, so we cannot compute an EV/EBITDA. Net assets were £245,000, meaning Hercules is paying around 4.1x book value – not unusual for a service business with know-how and customer relationships.
Bottom line: the multiple looks undemanding for a profitable, niche operator in a growing sector. That suggests potential for earnings enhancement if the business continues to perform, though integration and scaling always carry execution risk.
Share issuance, dilution and admission to AIM
The consideration shares – 965,915 at 36.38 pence – will be admitted to AIM on or around 17 October 2025 and rank pari passu, which means they have the same rights as existing shares. Post-admission, Hercules will have 80,585,543 shares in issue.
On our maths, the new shares equate to roughly 1.21% dilution, which is modest. The 12-month lock-in followed by a 12-month orderly market agreement helps reduce near-term overhang risk.
Partnership Agreement and future buyout mechanics
The vendor can sell the remaining 30% between the seventh and tenth anniversary of completion. The price is set at 4x the average EBITDA achieved by LPS in the two years before that sale, paid half in cash and half in Hercules shares. After year ten, Hercules can compel the purchase on the same basis.
This structure keeps the entrepreneur invested for the long run and aligns incentives to grow profits. The trade-off is that if EBITDA grows strongly, the eventual price for the minority could be higher – and there will be some future cash and share consideration to fund it. EBITDA for LPS is not disclosed today, so we cannot estimate that future outlay.
Why this matters for Hercules shareholders
Strategically, this is another building block in Hercules’ power and energy push, following Advantage NRG. LPS brings specialist substation and switchgear capability, a roster of blue-chip clients, and a profitable track record. Cross-selling between Advantage NRG and LPS looks plausible: lines, substations and commissioning often sit on the same project timelines.
Financially, the price looks fair, the dilution is small, and the cash element comes from existing resources. On the face of it, that is shareholder-friendly. If Hercules can help LPS scale without eroding margins, this could add meaningful value over time.
The balanced view – positives and watch-outs
- Positives:
- Exposure to a structural upgrade cycle in UK power networks, with £58 billion of National Grid-related investment flagged.
- Sensible valuation multiples and a profitable target with a ~20.7% PBT margin.
- Clear fit with Advantage NRG and a broader energy services proposition.
- Low immediate dilution and vendor lock-in reducing near-term selling pressure.
- Watch-outs:
- Integration and scaling risk – adding headcount and systems without denting quality or margins is never automatic.
- Customer concentration typical in power infrastructure – large clients can be demanding; pipeline visibility is not disclosed.
- Future minority buyout set at 4x EBITDA could be chunky if growth accelerates, with part of the consideration in new shares.
- EBITDA and order book for LPS are not disclosed, limiting visibility on run-rate performance.
What to watch next
Keep an eye on admission of the consideration shares around 17 October 2025 and any early commentary on integration with Advantage NRG. Updates on contract wins in the power segment would help validate the cross-sell thesis. Any disclosure on LPS’s EBITDA or order book would also improve clarity on the future minority buyout quantum.
Overall, this looks like a tidy, strategically aligned deal at a fair price in a market with tailwinds. Execution now matters – but Hercules is quietly assembling a focused platform in UK power infrastructure, and that should interest investors looking for growth in essential networks.
