Damstra Holdings (ASX:DTC) shareholders had two pieces of good news this morning: an acquisition and earnings growth.
Nine months since the workplace compliance tech stock listed, it is buying its industry and ASX peer Vault Intelligence (ASX:VLT).
It will give Vault shareholders 1 Damstra share for every 2.9 Vault shares they own, which values Vault at 46.4c per share.
The Vault board has endorsed the offer and Damstra told shareholders the merged entity was a compelling proposition.
It says the acquisition will help Damstra expand its existing offerings and the combined entity will be larger and more diversified.
Client numbers are expected to increase from 500 to 850 and users from 400,000 to 550,000.
“The merger of two leading workplace management providers represents a compelling opportunity for both sets of shareholders,” Damstra chairman Johannes Risseeuw said.
“Our due diligence process has confirmed the material strategic, operating and financial synergies.
“Our organic growth outlook remains strong but an acquisition such as Vault represents a low risk and a transformational step to gain increased scale and diversification.”
Vault CEO David Molyan agreed, saying the combined product offerings and market reach would be formidable.
Earnings beat target
Damstra also told its shareholders it achieved strong unaudited results this financial year.
Despite COVID-19, its earnings are forecast to be ahead of prospectus forecasts and guidance. Specifically it is expecting to book $5.5m off the back of $22.1m in revenue.
Damstra also expects further growth in the year ahead — 30-40 per cent growth in the next financial year.
While Damstra only slightly gained at market open, it is up 26 per cent in 2020 despite plunging in March.
Vault meanwhile surged 25 per cent. While Vault was sitting 15 per cent down in 2020, this flipped to a 16 per cent gain.