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Highlights
- Reckon to sell assets used by Accountants Practice Management Group for AU$100 million.
- Reckon expects to close the deal in next three months.
- On completion of transaction, Reckon will focus on legal practice management and business group.
Shares of a software services company, Reckon Limited (ASX:RKN) gained as much as 49% on Thursday’s defying the broader market selloff. The prices shot up after the company shared that it has inked an agreement to sell Accountants Practice Management Group for worth AU$100 million.
As per the ASX announcement, the group will sell its Accountants Practice Management Group to Access UK Ltd, Access Workspace NZ Limited and Access Software Australia Pty Ltd. For the uninitiated, the Access Group offers business management solutions and software.
At 11:54 AM AEST, the shares of Reckon were spotted trading 47% higher to AU$1.29 apiece, and with this, in the last five trading sessions, the shares have gained 50%. But on a year-to-date basis, RKN shares are up 38.17%.
In comparison, the ASX 200 index is bleeding today as was down 1.58% at the time of drafting this article. Reckon outperformed its broader benchmark index, ASX 200 information technology (XIJ) which 2.57% lower today.
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Details of the sales deal
Image source: © Racnus | Megapixl.com
As part of the deal, Reckon will sell the assets employed by its Accountants Practice Management Group. The assets comprise the Reckon Elite Practice Management products and the APS Practice Management.
The completion of the transaction is subject to approval from regulatory bodies such as the Foreign Investment Review Board and the Australian Competition and Consumer Commission. Also, customary closing needs to be fulfilled before closing the deal.
The sales deal follows the ReckonDocs Business sales for AU$13 million in 2021. It was part of the Reckon’s Practice Management Group. It is expected that the transaction will be completed in the coming three months.
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How would Reckon use the proceeds?
The company said that it would use the proceeds from the transaction to repay part of its outstanding debt, which would deleverage its balance sheet.
After closing the transaction, the company will focus on its cloud business. The cloud-based business has exposure to growing markets in the United States and Australia. These high-growth markets recorded revenue of around AU$50 million and AU$17 million of EBITDA in FY22.
What does management have to say about the sales agreement?
Sam Allert, CEO of Reckon Group, commented on the development:
The remaining business division of Reckon
After completing the transaction, the group will be left with the Business Group and Legal Practice Management Group. The Business Group offers payroll and accounting software. The Legal Practice Management Group focuses on providing workflow solutions and practice management to law firms in the USA.
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