PROACTIS Holdings PLC LON:PHD the specialist Spend Control software provider, has told DirectorsTalk that it has entered into a conditional agreement to acquire the entire issued share capital of Millstream Associates Limited, for a consideration of £15.5 million on a cash free/debt free and normalised working capital basis.
The Acquisition is to be funded by the combination of a proposed placing of up to 9,259,260 new ordinary shares of 10 pence each in PROACTIS at a placing price of 135 pence per Placing Share to raise up to approximately £12.5 million and a revolving credit facility of £6.0 million.
The board of directors of the Company believes that Millstream, a provider of eProcurement systems and services to the public sector, is complementary to PROACTIS’ existing business and that the rationale for the Acquisition is compelling and, at the same time, consistent with the Company’s stated strategy of growing organically and through carefully selected acquisitions that meet the Company’s specific criteria.
Highlights of the Acquisition
· The Acquisition is in line with PROACTS’ growth and acquisition strategy
· Millstream has a track record of conservative revenue growth with strong profit and cash generation, reporting revenues of £4.9 million and adjusted EBITDA (unaudited) of £2.0 million for the year ended 30 June 2016
· The Company has conditionally agreed to acquire Millstream for a consideration of £15.5 million on a cash free/debt free and normalised working capital basis
· Millstream provides eProcurement solutions to:
o Over 4,000 customers for its Tenders Direct product
o Over 50 public sector customers and more than 500 contributors for its bespoke portals and myTenders products
· The acquisition broadens the PROACTIS product offering and further expands its customer base providing cross-sell opportunities
· The Board expects the Acquisition to be immediately earnings enhancing
Highlights of the Placing
· Assuming all the Placing Shares are subscribed, the Placing is expected to raise gross proceeds of approximately £12.5 million to part-fund the Acquisition
· Assuming all the Placing Shares are subscribed, they will represent approximately 18.9 per cent. of the Company’s enlarged issued share capital immediately following Admission (as defined below)
· The Placing will be conditional upon, amongst other things, admission of the Placing Shares to trading on AIM (“Admission”). It is expected that Admission will become effective on 15 November 2016
The Placing is being conducted through an accelerated bookbuild process which will be launched immediately following this announcement finnCap Ltd is sole broker in connection with the Placing.
Rod Jones, Chief Executive of PROACTIS, said: “The acquisition of Millstream represents a significant step in our growth strategy, substantially increasing the scale of the Group. The acquisition broadens both the product offering and the customer base on the buy side of the procurement process whilst also bringing scale of operation on the strategically important supply side of the procurement process. Millstream is a clear complementary fit to the Group and provides some potential upside with cross-selling opportunities into both the PROACTIS and Millstream customer bases.”
