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Why this small cap ASX tech share is zooming higher today

The Straker Translations Ltd (ASX: STG) share price has started the week on a positive note.

In afternoon trade the leading translation platform provider’s shares are up 5.5% to $1.27.

Why is the Straker Translations share price zooming higher today?

Investors have been buying Straker Translations’ shares after it announced the acquisition of The New Zealand Translation Centre Limited (NZTC International).

NZTC International is a privately-owned translation company with over 30 years’ experience in the international translation and interpreting market.

Its portfolio of customers comprises well known multi-nationals such as Air New Zealand Limited (ASX: AIZ), Orica Ltd (ASX: ORI), and Fonterra (ASX: FSF), and New Zealand Government agencies such as the Ministry of Justice. Its unaudited revenue for the previous 12 months was NZ$4.3 million.

Acquisition rationale.

Management notes that the global enterprise market is increasingly moving towards comprehensive solution packages across geographies, languages and services.

The acquisition of NZTC International strategically adds interpreting services and supports its ability to provide enterprise customers with an integrated global offering covering translations, interpretation, and media localisation on a single technology.

The company’s CEO and co-founder, Grant Straker,  explained: “We are delighted to welcome NZTC International into Straker. There is a strong culture fit between the two companies, and this acquisition solidifies Straker’s leading position in New Zealand, further strengthens Straker’s customer portfolio, and has substantial upside once it is integrated onto our Ai powered RAY platform.”

“Many of NZTC International’s customers are located in the Asia Pacific region, and not just in New Zealand. We see strong growth from the Asia Pacific region, and this acquisition further strengthens our growth platform in this region. It consolidates Straker as one of Australasia’s largest language service providers, being able to provide a full suite of products and solutions to our growing base of Enterprise customers,” he added.

Straker has agreed a consideration of NZ$924,314 to be paid in cash and shares. There is also a maximum earn-out payment of up to NZ$775,000.

Management appears confident this will be money well spent. It concluded: “Following the successful integration of On-Global Language Marketing SL onto Straker’s Ai powered RAY platform, we are confident that we will be able to successfully integrate NZTC International in a short period of time and deliver a significant uplift in earnings from this business.”

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Straker Translations. 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.