Quantify Technology (ASX:QFY) hopes to offer more smart home products with the acquisition.
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Quantify Technology (ASX:QFY), one of the ASX’s few “smart homes” stocks, will be buying industry peer GSM Innovations.
GSM, which trades under the names of Zimi & Powermesh, builds and sells various connected devices for homes including electrical switches and light controls.
GSM was incubated and is still wholly owned by Gerard Industries, named after the South Australian family that owns it.
Quantify Technology will stump up $4.8m, in the form of shares and performance rights, for the acquisition.
The company also plans to undertake a 2 for 25 consolidation of shares and a $4m capital raising afterwards. This will fund development costs, overheads and general working capital.
But the acquisition and consolidation will not be effective until shareholders approve at its AGM, currently scheduled for November 30.
Quantify Technology told shareholders the deal would create “Australia’s leading electrical Internet of Things provider” and synergies between the companies would accelerate growth.
It says it will help the companies cross-sell a more complete family of connected smart home products, noting Gerard’s existing relationships with the electrical wholesale market.
Quantify Technology believes the smart home market will boom over the next decade.
It told shareholders it is already worth $1.8bn and growing at a compound annual rate of 16 per cent.
By 2025, 49 per cent of Australian houses will have some type of smart home device.
Other smart home ASX stocks have also benefited from this rapid market growth.
Buddy Technologies (ASX:BUD), which has a smart lighting business among other ventures, has notched a fivefold increase in just over two months thanks to strong sales figures.
Quantify Technology CEO Brett Savill said the company had been looking for the right partner for some time.
“Home automation is rapidly maturing meaning it is important to have multiple channels and a broad range of products,” he said.
“Quantify Technology’s acquisition of GSM-I is a real case of one plus one making three.”
Gerard chief technology officer Jordan Tentori and CEO Simon Gerard will both join Quantify’s board.
Gerard said the capital injection would help his company achieve its full potential.
Quantify shares have continually shifted between 0.1c and 0.2c for several months, which is likely a reason for the share consolidation.
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