The ReadyTech Holdings Ltd (ASX: RDY) share price has returned from its trading halt and is dropping lower.
At the time of writing, the education and employment software as a service provider’s shares are down 2.5% to $1.95.
Why was the ReadyTech share price in a trading halt?
Last week ReadyTech requested a trading halt after launching an equity raising to fund the potential acquisitions of leading government-based software provider, Open Office, and McGirr, a justice case management software provider.
The company has signed an agreement for an upfront consideration of $54 million and an earn out consideration of up to an additional $18 million. The upfront consideration is a mixture of cash ($40.1 million) and shares ($13.9 million).
Management notes that the proposed acquisition provides it with the opportunity to add a new and attractive vertical with entry into the local and state government and justice sectors while adding additional recurring revenue streams.
If completed, it is anticipated to be low double-digit earnings per share accretive in FY 2021 on a pro-forma basis before synergies and excluding integration costs.
Equity raising.
To fund the deal, ReadyTech launched an equity raising comprising a $25 million institutional placement at $1.88 per new share and a $4 million share purchase plan. The placement price represents a 6.2% discount to its last close price.
This morning the company revealed that it has successfully completed its institutional placement.
ReadyTech’s CEO, Marc Washbourne, commented: “We are pleased at the success of this equity raising. We are grateful to our existing shareholders, welcome our new shareholders and thank them all for their support.”
Management added: “The Placement will support this acquisition opportunity, providing ReadyTech with certainty as it finalises its due diligence and potentially enters into binding transaction documents. If the acquisition does not complete, ReadyTech will use the proceeds of the Placement to fund other growth opportunities, including potential M&A, consistent with its stated strategy.”
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Readytech Holdings Ltd. The Motley Fool Australia has recommended Readytech Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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