The acquisition of DevolulVA will see Way2VAT enter the Spanish market and roll out the world’s first Smart Spend Debit Mastercard through an established national network.

Value added tax (VAT) fintech Way2VAT (ASX:W2V) is set to enter the Spanish market after striking a deal to acquire Spanish company, DevoluIVA S.L.U.

The deal will also see W2V roll out the world’s first Smart Spend Debit Mastercard through an established national network.

Under the terms, W2V will acquire 100% of DevoluIVA by issuing 11.76 million of its own shares at 12.5 cents each to owner Voxel Media, valuing the deal at an initial consideration of 1 million euros ($1.47 million).

The acquisition is expected to be immediately revenue accretive for W2V as DevoluIVA has revenues of approximately $290k for the quarter ended 30 June.

The deal is also expected to contribute positive cash flows to the combined group soon after the acquisition completes.

 

About DevoluIVA

DevoluIVA was founded in 2010 in Barcelona as a spin-off of Voxel and was Spain’s first electronic solution that digitised corporate expense and VAT recovery.

The company is a key provider to the Spanish market of automated management of corporate expenses and automatic recovery of national VAT services.

DevoluIVA’s platform offers a fully digital domestic VAT reclaim service through a network of more than 130,000 merchants across Spain.

Its app allows users to locate restaurants, taxis, petrol stations and car parks affiliated to the DevoluIVA network. It then produces automatic electronic invoices for their professional expenses.

In 2019, the DevoluIVA app, which is available on Apple and Android devices, issued more than 600,000 invoices.

DevoluIVA currently employs 31 employees, has over 60,000 users and is affiliated with over 130,000 merchants.

 

Rationale for the acquisition

Way2VAT CEO and founder, Amos Simantov, said the acquisition provides four key benefits to Way2VAT.

First, it enables Way2VAT to enter the Spanish market with a complementary product suite to the existing DevoluIVA platform.

“DevoluIVA’s expertise on the unique characteristics of the Spanish domestic VAT system is the perfect way for us to then offer our foreign VAT capability,” Simantov said.

Secondly, according to Simantov, it provides a large market for W2V’s Smart Spend Debit Card that can be pushed through to DevoluIVA’s network of more than 130,000 merchants.

The Smart Spend Debit MasterCard allows businesses to control spending through Way2VAT’s platform to automate their VAT/GST returns from end-to-end.

Thirdly, the acquisition is revenue accretive and will have an immediate effect on Way2VAT revenue and EBITDA.

“And finally, the acquisition provides the basis for our multi-product strategy beyond Spain and into Latin America countries with similar domestic VAT structures,” added Simantov.

The acquisition is also aligned with Way2VAT’s long term strategy to grow rapidly through various paths, including acquiring companies that are complementary to its own business.

The synergy created by this acquisition is expected to improve margins as well as operational and financial scale as the two platforms merge.

 

Terms of the deal

Apart from the initial consideration mentioned, the agreement also entitles Voxel to receive performance-based earn-out payments in the future.

The first earn-out will be 12 months after the completion of the acquisition.

At this point, Voxel shareholders will receive Way2VAT shares equivalent in value to the greater either EUR 500k, or 1. 5 times the difference between DevoluIVA’s 2023 annual revenues less EUR 500k.

The second earn-out will be 24 months after completion of the acquisition.

At that time, Voxel shareholders will receive Way2VAT shares equivalent in value to the greater either EUR 500k, or 1. 5 times the difference between DevoluIVA’s 2023 annual revenues less 2022 revenues.

Finally, the third earn-out will be 36 months after completion of the acquisition.

At this time, Voxel shareholders will be entitled to receive such number of Way2VAT shares equivalent in value to the lesser of:

€500,000 divided by a deemed issue price of 12.5 cents.

or

the total of (the difference of Voxel’s 2024 revenues less 2023 revenues) plus (2024 revenues less 2023 revenues divided by two times the deemed issue price of 12.5 cents).

All three earnouts will be subject to shareholder approval.

Way2VAT says it intends to seek shareholder approval for the issue of the consideration shares at the company’s upcoming annual general meeting to be held in or around September.

 

Global leader

Way2VAT is a global leader in automated VAT/GST claim and return solutions in more than 40 countries and over 20 languages.

It serves hundreds of enterprise businesses worldwide, owns and operates a patented artificial intelligence technology that powers the world’s first fully automated, end-to-end VAT reclaim platform.

Established in 2014, the company is headquartered in Tel Aviv with offices in the UK, US and Romania and has over 55 employees.

There are three types of expenses that the W2V platform deals with. The first two are travel expenses – both foreign and local travel. The third type of expense it deals with is accounts payable – those large invoices a company must pay in various countries.

In 2018, Way2VAT was granted the first ever patent in the US for its automated invoice analysis (AIA) technology.

 

This article was developed in collaboration with Way2VAT, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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