Yrityskauppa!
ZignSec is expected to provide 100 percent of the shares to Wyzer Limited
ZignSec AB (“ZignSec”) has today entered into an agreement to acquire 100 per cent of the Malta-based entity Wyzer Limited, including its subsidiary Caledo Tech Limited (“Wyzer”).
Wyzer is a leading provider of software specifically designed and written for optimizing and automating the management of business processes and verifications in Malta and internationally. The Company was founded in 2017 by Dr. Abdalla Kablan (Chairman of the Board) and Daniel Grech (CEO) and has a team of 11 people. From 1 September 2019 to 30 August 2020, Wyzer’s revenue was reduced to SEK 5.5 million and EBIT to SEK 1.6 million.
The transaction in brief
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The transaction is in line with ZignSec’s previously communicated strategy to perform complementary acquisitions to establish a Stronger industry position.
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The transaction is expected to result in an increasingly diversified business model with recurring revenues.
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Completion of the transaction is subject to customary conditions including foreign investment approval, and closing is expected to take place during Q1 2021.
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The consideration for the shares in Wyzer amounts to EUR 3 million, equivalent to SEK 30.5 million [1], paid at the closing of the transaction (the “Upfront Consideration *”) * EUR 1.5 million, equivalent to SEK 15.25 million, of the Upfront Consideration will be paid with ZignSec shares (the “Consideration Shares *”), based on the Volume Weighted Average Price (“VWAP *”) on the Nasdaq First North Growth Market for the 10 consecutive trading days prior to this announcement (excluding today’s trading ) equal to SEK 22.05 per Consideration Share. * 25 per cent of the Consideration Shares will be subject to a 3-month lock-up and 75 per cent of the subject to a 1-year lock-up from the date of completion of the transaction * EUR 1.5 million, the equivalent of SEK 15.25 million, of the Upfront Consideration will be paid in cash.
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The transaction also includes earn-outs in the maximum amount of EUR 2 million, equivalent to SEK 20.3 million (using the current Fx rate EUR / SEK) for each of the financial years 2021 and 2022 (the “Earn-Out *”) . * The Earn-Out is based on Wyzer’s net sales during the respective financial year and will be paid 50 per cent in cash and 50 per cent with ZignSec shares (the “Earn-Out Shares *”) unless ZignZec chooses that the Earn- Out shall be paid 100 per cent either in cash or with Earn-Out Shares. * The subscription price for the Earn-Out Shares will correspond to the VWAP on the Nasdaq First North Growth Market for the ten consecutive trading days preceding the date of each Earn -Out Share issue. * The Earn-Out Shares will be subject to a 1-year lock-up from the respective dates of the Earn-Out Share issue.
Background and Rationale
Wyzer is a business process management and automation company based in Malta. The company is a leading provider of software designed for optimizing and automating the management of business processes and verifications for large, medium and small enterprises and has a competitive edge within artificial Intelligence and Automation. The Company was founded in 2017 by Dr. Abdalla Kablan (Chairman of the Board) and Daniel Grech (CEO) and has a team of 11 people. Wyzer is currently launching their new Flagship product Wyzer Work which has the following functionality:
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Intelligent Automation
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Digital Signatures
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Document Generation
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Analytical Reports
The company is rapidly growing and is expected to generate healthy operating margins. Wyzer is currently shifting towards a business model completely based on subscription fees which entails recurring revenue. The Rationale behind the acquisition of Wyzer is its experienced team, profitability, access to the client network and to complement ZignSec’s product offering.
Purchase Price, Earn-Out, Lock-Up Period
The upfront purchase price of EUR 3 million, equivalent to approximately SEK 30.5 million, is paid with EUR 1.5 million in cash, equivalent to approximately SEK 15.25 million, and EUR 1.5 million, equivalent to approximately SEK 15.25 million, is paid with newly issued ZignSec shares. The Consideration Shares are issued at SEK 22.05 per share, equal to the VWAP on the Nasdaq First North Growth Market for the ten consecutive trading days prior to this announcement (excluding today’s trading).
25 per cent of the Consideration Shares will be subject to a 3-month lock-up period and 75 per cent are subject to a 1-year lock-up period from the date of completion of the transaction.
The Sellers are also entitled to an Earn-Out of up to EUR 4 million - EUR 2 million each for the financial years 2021 and 2022 - equivalent to SEK 40.7 million using the current Fx rate EUR / SEK at the Riksbank. The Earn-Out is based on the net sales for the financial years 2021 and 2022 and calculated as 1x (one time) the net sales for the relevant financial year given that Wyzer’s EBIT for the relevant year is positive and as 0.5x (five -tenths of) the net sales should Wyzer’s EBIT for the relevant year be negative. The amount of the Earn-Out pertaining to the financial year 2022 will, after calculation in accordance with the provisions above, be subject to a EUR 200 thousand reduction. The total amount of the Earn-Out for a single year may never exceed EUR 2 million, implying a maximum Earn-Out of EUR 4 million.
The Earn-Out shall be paid in two tranches - one in 2022 (based on Wyzer’s net sales for 2021) and one in 2023 (based on Wyzer’s net sales for 2022) - and be paid 50 per cent in cash and 50 per cent in Earn-Out Shares unless the Buyer chooses to pay either 100 per cent in cash or 100 per cent with Earn-Out Shares.
Issue of Consideration Shares
The board of directors of ZignSec will resolve to issue the Consideration Shares at the completion of the transactions to the authorization granted by the annual general meeting on May 22, 2020.
The Consideration Shares represent 3.0 per cent of the total number of shares and votes in ZignSec on a fully diluted basis. By issuing the Consideration Shares, the number of shares and votes increase by 691,461. The share capital increases by approximately SEK 27,402.66.
The Consideration Shares are issued at SEK 22.05 per share which equals the ten day VWAP of ZignSec shares on the Nasdaq First North Growth Market up to and including December 17, 2020 and using the FX rate EUR / SEK of 10.1645 per December 17, 2020, at Riksbank.
Closing of the transactions
Closing of the transactions are subject to customary conditions including foreign investment approval, and closing is expected to take place during Q1 2021.
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