Australian crowdsourced app and mobile payments platform provider Crowd Mobile has entered a share purchase agreement to acquire Netherlands m-payments company Track Holdings for AU$35.5 million, with the company offering a fully underwritten rights issue, forecast to raise around AU$12.8 million before costs, to enable the purchase.
The acquisition will be completed via €17 million in cash, €1.7 million worth of shares, and €3.7 million in consideration for the Netherlands-based company's net tangible assets. According to Crowd Mobile CEO Domenic Carosa, the acquisition will serve to further expand the company's European footprint.
"The Track Concepts acquisition extends the company's global m-payments network, reaching over 160 mobile operators across 50 countries, allowing Crowd Mobile to accelerate its launch of existing products into new markets, and offers significant cross-promotion opportunities and customer acquisition synergies," said Carosa.
"In addition, Track Concepts is a highly profitable and cash-generating business, and will provide Crowd Mobile with strong growth in revenue, earnings, and free cash flow."
Under the agreement, the owners of Track Holdings will provide consulting and management services until May next year, with the employees in the Netherlands office also being retained to work under the Crowd Mobile banner.
According to Crowd Mobile, the combined revenues of the two companies for the year ending June 2015 would have reached AU$43 million; with gross profit of AU$24.8 million, and earnings before interest, tax, depreciation, and amortisation (EBITDA) of AU$15.9 million.
The acquisition will be partly funded via a pro-rata fully underwritten non-renounceable rights issue on a 3:5 basis at a price of AU$0.25 per share, with the company's directors and senior management committing to sub-underwrite AU$1.77 million. All funds raised by the share issue will go towards acquiring Track Holdings.
Crowd Mobile already provides m-payments platforms globally, including in Australia, New Zealand, Germany, the United Kingdom, Mexico, Ireland, Norway, Denmark, Poland, Hungary, Turkey, Italy, Spain, Belgium, Switzerland, and Portugal. It is also eyeing expansion opportunities into North America, Asia, and Africa.
"The fully underwritten rights issue we are launching today will enable Crowd Mobile to complete the Track acquisition. In addition, it also provides the company with the flexibility to fully capitalise on the future growth opportunities of the combined group and positions Crowd Mobile as a leading m-payments organisation globally," said Carosa.
"The acquisition will provide strong revenue and earnings growth for Crowd Mobile, as well as extending the company's global m-payments reach to over 160 telcos and opening up new markets, leaving the company very well placed to leverage the global mobile economy mega trend."
Crowd Mobile completed its initial public offering and listed on the Australian Securities Exchange (ASX) in January after raising AU$3.8 million.
Along with providing m-payments platforms, Crowd Mobile also owns crowdsourced Q&A mobile apps and SMS entertainment services Bongo Thinks, Passion for Fashion, What Would Jesus Do, Bongo, 63336, and Buddy. It charges a fee of approximately AU$2 for each question asked by a user that receives an answer, with the fee split between Crowd Mobile, telco carriers, and app stores.
Crowd Mobile retains around 35 percent to 75 percent of each transaction on its so-called "micro job platform" wherein answers to questions are crowdsourced globally. During FY14, over 3.4 million questions were answered through its apps and services, with the company generating AU$9.8 million in revenue and EBITDA of AU$2.2 million.
On January 23, it also purchased Hong Kong startup Kiss Hugs, which the company said would be the base for its Asian growth opportunities.
The company currently has offices in Richmond, Australia; Berlin, Germany; London, the UK; and Budapest, Hungary.