This acquisition would likely result in 63% dilution for existing shareholders - 1149m share base could get to 1797m, an addition of 648m shares. 226m now @8c to pay half of the cash consideration, the remaining half via debt to be raised. Then subsequently another CR to raise US$24.5m (A$33.8m) -that's another 422m shares if price at 8c as well. So the owners of LIFX would get about 36% of the enlarged share capital, so pretty much close to a reverse takeover!
US$51m acquisition cost for a business that has A$40m annual revenue , -$3.4m EBITDA. But the loss of the business is likely to be much higher than -$3.4m, could even be $5-8m loss.
Great for revenues, but cashflow is the issue with this acquisition, especially with higher financing cost from the $18m debt. I also question why a business with $40m revenues is still loss making? And while it has projected getting profitable soon, we have been there before. So I don't know if its a great buy a business @A$70m for a business yet to be profitable and not even cashflow positive!
As I mentioned, the winners will be the acquire.
So much for the Ohm business (failed!), LIFX is the new business of BUD!
Because its a lighting business, you should benchmark against VIV, as a comparable peer.
I can't comment about where I see LIFX future prospects but suffice to say that DM (he failed you guys miserably!) is no longer numero uno in BUD and I wont be surprise if there would be management changes subsequent to completion of the exercise. And that would be good news for you shareholders. Good luck folks!
BUD Price at posting:
9.4¢ Sentiment: Sell Disclosure: Not Held
