Software solution provider, Covata Limited’s (ASX:CVT) securities were voluntarily suspended today (30 January 2019) from the quotation at the request of CVT, following the announcement regarding the acquisition of dataglobal GmbH. The reason behind the voluntary suspension is to enable the Company to manage its continuous disclosure requirements while it seeks to implement the Proposed Acquisition.
As per the company’s request, the suspension will be extended until such time as the Company is able to satisfy ASX that it has provided sufficient information regarding the Proposed Acquisition to enable trading in the Company’s securities to re-commence.
Today, the company announced that it is going to acquire German-based content services, digital workplace and archiving software provider dataglobal GmbH (dataglobal or dg). dataglobal GmbH has a 20-year history of strong customer relationships with little customer turnover.
The company’s management believes this acquisition will position the Company strongly for the future. After the completion of the acquisition, it is expected that Covata will be rebranded as dataglobal Limited and it will be positioned as a leading content services player providing discovery, classification, security, protection and archiving services.
The company has entered into a binding but conditional agreement to acquire dataglobal. The acquisition is subject to the completion of due diligence, regulatory and shareholder approvals and completion of a capital raising currently proposed to be approximately A$20 million.
Under the acquisition terms, the Company will acquire all of the issued share capital from the dataglobal shareholders for a total of €13 million with consideration settled approximately 65% in cash and approximately 35% through the issue of ordinary Covata shares.
The company has secured funding by way of issuing Convertible Notes to support the direct costs of dataglobal acquisition and the Company’s working capital requirements during the acquisition phase.
The Company has completed a period of due diligence investigations into the dataglobal business both remotely and in Germany. Currently, the Board believes that the proposed acquisition is in the best interests of shareholders. However, the acquisition remains subject to completion of further internal due diligence by the Company by 28 February 2019.
The company has also granted a call option whereby it may undertake a potential divestment of its existing SafeShare intellectual property subject to retaining certain licence and reseller rights. The company has implemented an interim change to the Board during the period in which it seeks to implement to the proposed acquisition, with Mr. Lindsay Tanner resigning and the Company’s CFO, Steven Bliim, being appointed.
In the past six months, the share price of the company decreased by 40 percent on 29 January 2019. CVT’s shares traded at $0.015 with a market capitalization of circa $11.61 million as on 30 January 2019.
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