IkeGPS will raise up to $6.5 million at a small discount to buy US engineering software developer PLT for as much as US$3.4m ($5.4m) in cash and shares.
The US firm is profitable and will immediately add to Ike's earnings, but will also open up a chance of cross-selling the IKE Analyze product to a wider customer base, it said in a statement. PLT is forecast to generate a profit of US$300,000 on revenue of US$800,000 in calendar 2019.
Ike will pay US$2.5m for the acquisition with a potential earn-out of up US$900,000 over a three year period, provided PLT's founder remains employed by Ike. The New Zealand firm will pay US$1.75m in cash upfront and issue US$750,000 of shares at 60 cents apiece. The earn-outs will also be a 70/30 split between cash and shares, with the issue price at 60 cents.
"This acquisition allows us to bring their technology in-house and opens up a number of additional pathways for growth, including through marketing to a broader customer base and an enhanced product offering," Ike chief executive Glenn Milnes said.
Ike will fund the acquisition selling shares at 60 cents apiece, a small discount to the 64 cents they closed at yesterday. Of that, $5m was raised overnight in a placement to investors, and another $1m be sold in a retail offer to existing shareholders, with the ability to accept $500,000 over over-subscriptions.
The shares were unchanged when the market opened this morning.
The retail offer opens on October 1 and closes on October 17.
Ike this month said it may break even in the September quarter, with the IKE Analyze product driving revenue growth and wider margins. At the time, it said its cash and receivables should be $4.5-4.8m at the end of September, in line with the $4.9m held at the end of March.