IMImobile (LON: IMO), a global cloud communications software and solutions provider, has today announced that it has conditionally agreed to acquire the entire issued and to be issued share capital of 3CInteractive Corp., a private US cloud-based multichannel, customer engagement platform company with a leading position in Rich Communication Services, on a debt-free, cash-free, basis for a total consideration of $53.2m (£42.8m).
The Total Consideration will be satisfied through $43.2m (£34.7m) in cash on completion and $10.0m (£8.0m) through the issue of up to 2,567,256 new IMImobile ordinary shares of 10p each which will be deferred for up to two years with founders and key employees subject to a further 12 month orderly market agreement thereafter.
IMImobile proposes to fund the Initial Consideration through the drawdown of new debt facilities of up to $18.7m (£15.0m) and a proposed placing of up to 6,533,422 new ordinary shares of 10p each in the capital of the Company, representing approximately 9.7 per cent. of the existing issued share capital of the Company, at a price of 310p per share to raise gross proceeds of up to $25.2m (£20.3m).
The Acquisition is expected to be immediately earnings accretive, being marginally accretive in the current year ending 31 March 2020, with low double-digit earnings accretion in the year to 31 March 2021.
The Placing is being conducted by means of an accelerated bookbuild process, which will be launched immediately following this Announcement. Investec Bank plc and N+1 Singer Advisory LLP are acting as joint bookrunners (together the “Joint Bookrunners”) in connection with the Placing.
Transaction highlights
· IMImobile has agreed to acquire 3C, a US based mobile engagement platform company with a leading position in RCS in North America for $53.2m on a debt-free, cash-free, basis.
· In the year to 31 December 2018, the core services of 3C generated revenues of $24.2m and gross profit of $15.7m. On a standalone basis the core business was expected to be EBITDA break-even in the year to 31 December 2019.
· The consideration for the Acquisition will be funded by a combination of the proceeds of the Placing, 2,567,256 Consideration Shares and the drawdown of new debt facilities.
· 3C is a pioneer for deployment of RCS solutions. The Acquisition provides IMImobile with an opportunity to establish a global leadership position in the RCS market which is forecast to grow at a CAGR of 40.5% from 2019-2024, with North America comprising the largest market share.
· Following the Acquisition IMImobile will have direct SMS short code connectivity to all major US and Canadian carriers which is very difficult to achieve organically making 3C a highly strategic asset.
· The Acquisition will accelerate IMImobile’s growth strategy and further strengthen the Group’s position in North America, the largest addressable market for the Group’s software.
· 3C adds complementary product capabilities and a blue-chip customer base which provides significant opportunities to cross and upsell IMImobile’s cloud product set, further positioning the Group as a global provider of Enterprise communications platform as a service (CPaaS). Further, significant cost synergies have also been identified in technology development and central management.
· Placing of up to 6,533,422 Placing Shares at 310p per Placing Share to be conducted by way of an ABB to raise up to $25.2m (£20.3m).
· The Acquisition and the Placing are expected to be immediately earnings accretive, being marginally accretive in the current year ending 31 March 2020, with low double-digit earnings accretion in the year to 31 March 2021.
· The Placing is not conditional upon approval by IMImobile shareholders or completion of the Acquisition.
Note: Figures based on an exchange rate of GBP £1 = USD 1.2438
Jay Patel, Group Chief Executive Officer of IMImobile PLC, commented:
“We are delighted to announce the acquisition of 3C. It is a business with deep relationships with blue chip customers and the major US mobile operator networks as well being a pioneer in developing RCS as a channel for customer engagement.
The acquisition will provide an opportunity to introduce the Group’s core Enterprise CPaaS capabilities and suite of customer engagement products into the US, which is our largest addressable market. We also hope to consolidate our strategic leadership position in introducing new communication channels to our clients and partners worldwide.”
