In a rare case of life imitating the share market Hotcopper Holdings (ASX: HOT) is buying another stock market tipping forum in Canadian doppelgänger Stockhouse.com for C$20 million.
The deal will see Hotcopper pay C$16 million (A$17.7m) upfront in cash with another C$2 million payable in Hotcopper scrip. Another C$1 million will be due in 6 months with another C$1 million payable if Stockhouse delivers C$10 million in revenue over the calendar year 2020.
As at 30 June 2019 Hotcopper had cash on hand of just $1.49 million and to fund the deal is seeking to raise $6.9 million from existing shareholders via the issue of 1 new share for every 2 held at a price of 13 cents per share. The difference in the amount required to fund the deal will be made up by bank debt.
Today the stocks is at 18 cents per share, which is a decent discount for potential Hotcopper supporters in the raising. As far as I could see the presentations do not disclose whether or not Stockhouse is profitable, which suggests it's not.
Over fiscal 2019 Hotcopper reported a net profit of $264,625 on revenue of $5.86 million.
