Artificial Intelligence (AI) and e-Commerce marketing company OpenDNA Limited (ASX: OPN), on 28 November 2019, announced to have executed the definitive share purchase agreement for the acquisition of Quality Brands International Direct (QBID), a China market entry and digital marketing company. As a result, OpenDNA’s digital marketing capability, e-commerce platforms and revenue in the Chinese market are expected to be largely enhanced.
Within the next two days, all conditions precedent to the acquisition would be completed, following which, OPN would issue $ 491,667 in fully paid ordinary shares to the shareholders of QBID at $ 0.038 each and a cash payment of $ 50,000. There are certain other precedent conditions but only administrative in nature. Around $ 125,000 of the initial upfront cash payment is stated to be applied for working capital purposes in the QBID business, while OpenDNA would be issuing 12,938,605 fully paid ordinary shares to close the acquisition.
QBID has witnessed successful expansion of e-Commerce sales in China over the last four years, owing to its impressive capabilities and efforts, across a wide variety of well-established e-Commerce platforms and e-Retailers including the traditional B2B distribution for imported and registered products. This strategic acquisition would build on the services of OpenDNA, particularly, the RooLife business that would see the addition of QBID’s high-quality capabilities including warehousing, logistics, translation, digital marketing, trade regulation and e-Commerce platform marketing across the Chinese market.
OPN’s RooLife Expanded Product Range & Revenue Lines with QBID
A part of the total value consideration to be paid to QBID by OpenDNA is based on delivering some milestones that are aligned with achieving revenue targets (as given in the table below) with the company able to fund the $ 50,000 cash acquisition component out of its existing cash reserves.
With the finalisation of the acquisition, OpenDNA also confirmed its earlier stated guidance that the onboarding of QBID to its business is expected to be revenue accretive by more than a million in the current quarter. Also, OpenDNA is sure to further enter 2020 with an expanded customer base, product offerings and a large revenue figure that would largely accelerate the company’s growth. For the latter part of FY20, the revenue contribution from QBID is forecast to be approximately $ 1.2 million, as stated by the company.
QBID’s founder, George Panagios also pleasingly commented on this development and remarked that the whole QBID team is thrilled to be part of the OpenDNA group and to be working closely with the OPN team. The amalgamation of the two companies presents a unique combination of skillsets, networks and delivery capability that is enviable in the two countries. QBID is also looking forward to the opportunities ahead post the deal with OpenDNA and excited by the prospect.
Stock Performance: OpenDNA has a market capitalisation of ~ AUD 9.81 million with ~ 272.5 million shares outstanding. On 28 November 2019, the OPN stock settled the day’s trade at AUD 0.039, edging up 8.333% by AUD 0.003 with ~ 456,771 shares traded. The stock has also delivered positive returns of 2.86% year-to-date and in the past one month, respectively.
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