RedstoneConnect Plc (LON:REDS), a leading provider of technology and services for smart buildings and commercial spaces, has today announced that it has entered into a conditional agreement to acquire the entire issued share capital of Easter Road Holdings Limited and its subsidiary, Anders + Kern U.K. Limited, a systems and solutions integrator specialising in meeting room management and audio visual (“Anders + Kern” or “A+K”) (together, the “Acquisition”), for cash consideration of £1.4 million.
The Company is also pleased to announce a proposed placing of up to 433,333,334 new ordinary shares of 0.1 pence each (the “Ordinary Shares”) in the capital of the Company (the “Placing Shares”) at a price of 1.5 pence per Placing Share (the “Placing Price”) to raise up to £6.5 million (before expenses) (the “Placing”).
Part of the net proceeds from the Placing will be used to finance the cash consideration of the Acquisition. In addition, the net proceeds of the Placing will enable the RedstoneConnect group (the “Group”) to accelerate investment in the ongoing development of OneSpace, its occupancy management tool, to strengthen the development of its sales and marketing channels and it will provide additional working capital for the enlarged RedstoneConnect group.
The Acquisition is in line with RedstoneConnect’s stated strategy to grow the Company’s Smart Buildings offering, both organically and by acquisition. The board of directors of the Company (the “Board”) believes that the acquisition of Anders + Kern will bring significant benefits to the Group in terms of expertise in the meeting room management space, an experienced sales and marketing team alongside an established customer base and channel partner network.
The Placing will be conducted by way of an accelerated bookbuild process, which will be launched immediately following this announcement, in accordance with the terms and conditions set out in the appendix to this announcement (the “Appendix”) (which forms part of this announcement, such announcement and the Appendix together being this “Announcement”). Cantor Fitzgerald Europe (“Cantor Fitzgerald”) and Whitman Howard Limited (“Whitman Howard”) are acting as joint bookrunners in connection with the Placing. A placing agreement (the “Placing Agreement”) has been entered into today between the Company, Cantor Fitzgerald and Whitman Howard in connection with the Placing.
Transaction highlights and rationale
A key strategic growth priority for the Group is to broaden its Smart Buildings offering, with specific focus on the agile working and connected office space, which the Company currently addresses through its OneSpace product.
It is anticipated that the Acquisition will bring a number of strategic benefits to RedstoneConnect, namely:
· Anders + Kern is an established distributor and integrator of meeting room booking systems and audio visual solutions, which are complementary to the Group’s OneSpace solution and should expand RedstoneConnect’s customer reach for its Smart Building offering.
· In the financial year ended 31 March 2017, Anders + Kern generated revenues of £3.37 million, gross profit of £1.14 million and adjusted EBITDA of approximately £346,000.
· A+K’s experienced sales and marketing team will be consolidated with the OneSpace marketing team and RedstoneConnect will utilise the enlarged team, led by the current A+K Managing Director, Steven Black, to sell RedstoneConnect’s suite of software products.
· The Acquisition will broaden RedstoneConnect’s blue-chip customer base with existing A+K clients including British Library, MacMillan, Saville, Tullow Oil and BBC Worldwide, providing further opportunity to cross-sell the Group’s products.
· Following completion of the Acquisition, the Board has also decided to seek shareholder approval at the Company’s forthcoming annual general meeting, for a share consolidation based on every 100 existing ordinary share of 0.1p each being consolidated into one new ordinary share of 10p each and a capital reduction.
Commenting on the proposed Acquisition, Mark Braund, CEO of RedstoneConnect plc said: “The acquisition of Anders + Kern is another important strategic development for RedstoneConnect. It broadens our smart building proposition, expands both our direct and indirect sales channels and it also provides the opportunity to leverage A+K’s expertise to accelerate the development and deployment of OneSpace. We are delighted to welcome A+K’s experienced sales, marketing and technology teams into our business which will add momentum to our ‘go to’ market strategy.
“I am also pleased to announce the Placing of up to £6.5 million, the proceeds of which will fund both the Acquisition and the continued implementation of our strategy. Our focus remains on the establishment of high-margin, recurring revenues and a strong portfolio of proprietary intellectual property. We continue to believe that we are extremely well placed to capitalise on the significant market opportunity that exists within the Smart Buildings arena.”
