Shares in surveying firm Veris (ASX: VRS) have spiked by more than 22 per cent in early trade on the news that Telstra’s (ASX: TLS) business services subsidiary has acquired technology solutions business Aqura Technologies for $30 million.
Aqura, a wholly owned subsidiary of Veris, will become part of Telstra Purple post-settlement - a moment described as “crystallisation” of value for the listed parent and its shareholders which have grown the business over a six year period.
Completion of the proposed transaction is subject to a number of terms and conditions, but is expected to settle on 28 February 2022, with the $30 million sale price representing close to 98 per cent of Veris’ total market capitalisation ($37 million at close of trade on Friday 28 January).
According to Veris, the company received a number of unsolicited approaches to buy Aqura since the parent floated the idea of demerging the enterprise communications and IoT business in the second half of last year.
Since then, Veris said its board has been assessing whether a takeover or an initial public offer for Aqura would be in shareholders’ best interests, before deciding to pursue the proposed deal with Telstra Purple as the best outcome.
“The Board believes the sale of Aqura to Telstra Purple represents a compelling outcome for all of Veris’ stakeholders, including shareholders, and results in Veris being strongly positioned to grow its digital and spatial offering,” says the Veris board.
“The Proposed Transaction also presents an outstanding opportunity for the Aqura team and its ability to accelerate the growth opportunities presented in their markets.
“The sale consideration of $30 million cash, subject to customary net debt and working capital adjustments, represents an attractive valuation for a business that has been developed, funded and grown within the Veris Group since Aqura’s formation from an embryonic start-up phase in 2016. The sale price represents approximately 98 per cent of Veris’ market capitalisation prior to the announcement of the Proposed Transaction on 31 January 2022.”
Veris chairman Karl Paganin said the sale represented an important milestone in the history of the parent company and is an excellent outcome for shareholders and the Aqura team.
“Whilst Aqura has been growing strongly under Veris’ ownership, the board is of the view that the timing is right to sell the business to provide the Aqura team the opportunity to accelerate this growth further by accessing Telstra’s existing sales and customer channels, along with the balance sheet strength to fund further organic growth opportunities via additional investments in sales and technology product offerings,” Paganin said.
“Following the sale of Aqura, Veris Ltd will be in a position to retire all bank debt and be well capitalised with a strong balance sheet and a significant net cash position. This balance sheet strength will place Veris in a strong position to pursue its growth ambitions for Veris Australia and underpin the continued expansion of Veris Australia’s digital and spatial data-as-a-service strategy.
“Veris continues to make significant progress in the turnaround of its operating platform, coupled with the execution of its growth strategy centred on its position as Australia’s leading provider of end-to-end spatial data solution capabilities. The additional capital available from the Aqura sale proceeds will enable further investment in leading-edge equipment and personnel skillsets to further capitalise on our national footprint and Tier 1 client base across a range of key markets including the infrastructure, property, resources, defence, utilities and government sectors.”
Post-acquisition, Veris intends to use the $30 million of proceeds to accelerate the company’s digital and spatial strategy.
“The ability to accelerate this strategy via further investment in leading edge technology and equipment, coupled with the capability to continue attracting highly skilled team members trained in data analytics and geospatial modelling, is expected to deliver shareholder value across a range of short, medium and long-term horizons,” the Veris board said.
“The Board is also considering capital management alternatives to enhance shareholder value.”
Shares in Veris are up 23.73 per cent to $0.073 per share at 12.04am AEDT.
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