A Sydney-based virtual data room solutions company that helps global companies manage M&A deals, capital raises, boards, governance and more has reached a deal to be acquired, giving Ansarada Group (ASX: AND) an implied equity value of $263.3 million as it looks set to change hands.
Ansarada's Minnesota-based rival Datasite has entered into an agreement to acquire 100 per cent of capital in the Australian business at $2.50 per share, representing a 19 per cent mark-up to the last closing price.
Used by 13,691 customers in 180 countries including 87 of ASX100 companies on its books, Ansarada was founded in 2005 with its name an agglomeration of the first two letters of the names of its four founders - chief technology officer Andrew Slavin, chief executive officer Sam Riley, head of GRC/ESG Rachel Riley, and Daphne Chang.
As of mid-2023 the group employed 178 people across its offices in Sydney, Chicago, London, Amsterdam, Johannesburg and Ho Chi Minh City.
Ansarada claims more than US$1 trillion worth of deals have transacted on its platform with customers including the likes of BlackRock, Visa, UBS and Deloitte.
While its origins are in deals, over time Ansarada has also rolled out software solutions to assist customers with day-to-day operations or optimising information dissemination, covering matters such as procurement, governance, risk and compliance (GRC), and environment, social and corporate governance (ESG).
However, as negotiations progressed Datasite confirmed it did not wish to acquire Ansarada's cashflow-negative, early-stage ESG, GRC or Board businesses, so co-founder and CEO Sam Riley has agreed to acquire these divisions as carve-out assets for $500,000.
Implementation of a scheme of arrangement between the two companies is conditional on this divestment to Riley going ahead.
Because of his conflicted interest around the carve-out transaction, which itself is also interdependent on the scheme being approved, Sam Riley has been excluded from the board of recommending directors, all of whom recommend in favour of the agreement alongside Ansarada's independent board committee of non-executive directors.
"As a co-founder of Ansarada I am very excited by the prospect of Ansarada and Datasite joining forces. The proposed transaction represents the culmination of almost 18 years of work to improve the deal management process," says Sam Riley.
"At this stage of our lifecycle, we see tremendous value in combining the Ansarada Deals and Procure products with Datasite.
"We have a shared vision of development and how we should serve our customers, and joining forces allows a broader and deeper product suite for our customers, and opportunities for the Ansarada team in a global business."
He says the carve-out transaction, whilst presenting more risk as a standalone business, "enables maximum value for Ansarada shareholders".
"I’m passionate about ensuring every stakeholder in this transaction is served well. The carve-out transaction ensures those early-stage products, customers and the team behind them continue strongly," he adds.
Ansarada chairman and independent director Peter James says the all-cash acquisition and the premium it represents reflects a constructive process between Ansarada and Datasite that has involved board members and key management personnel from both parties.
"The independent directors believe the offer made to Ansarada shareholders appropriately values the Deals and Procure products. After an extensive and collaborative process, we are pleased to be entering into this binding transaction and believe it is in the best interests of our shareholders," James explains.
"Datasite believes that Ansarada’s Deals and Procure products are complementary to their strategy moving forward, which form the basis of the scheme and the carve-out transaction.
"It is intended that the early-stage ESG, GRC and Board businesses will continue to operate on a standalone basis with a pre-committed level of working capital. These businesses remain in their infancy, and as a collective are loss-making to the Ansarada Group and require continued investment and focus on product market fit, go-to-market strategies and other early-stage business considerations."
Datasite president and CEO Rusty Wiley says describes Ansarada's Deals and Procure products as highly complementary to Datasite’s existing platform.
"We are excited to continue our expansion in Asia Pacific and to accelerate the growth of Ansarada’s Deals and Procure products through Datasite’s global footprint," says Wiley.
"Over the last several months we have assessed the other components of Ansarada’s portfolio and concluded that these were non-core to Datasite and should be divested. We have therefore required Ansarada to carve out those components and have reached an agreement with them as to the terms on which this should occur.
"We also look forward to welcoming Ansarada’s talented team to Datasite and partnering together to deliver high-quality service, innovation and value to our customers around the world."
The acquisition is subject to the approval of Ansarada's shareholders, who are due to be sent more details about a scheme meeting in April, as well approval from the Foreign Investment Review Board (FIRB), court approval and no material adverse changes to the business.
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