Why the CV Check (ASX:CV1) share price is rocketing 20% to a record high

The CV Check Ltd (ASX:CV1) share price is rocketing higher on Wednesday. Here’s why its shares just hit a record high…

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The CV Check Ltd (ASX: CV1) share price has returned from its trading halt and is rocketing higher today.

The leading online integrated screening and verification company’s shares jumped 20% to a record high of 21 cents.

This means the CV Check share price is now up 75% over the last 12 months.

Why is the CV Check share price zooming higher?

Investors have been buying CV Check shares on Wednesday following the announcement of an acquisition.

According to the release, the company has entered into a binding share purchase agreement with the shareholders of CI6 to acquire 100% of the entity that owns Bright People Technologies and associated group entities.

Bright People Technologies is a software-as-a-service (SaaS) cloud-based provider of workforce credentials and compliance software through the Enable and Cited brands.

Its software allows operators and contractors to run workforce compliance end-to-end. This includes identity and verification, onboarding and induction, deployment and re-deployment, and ongoing compliance monitoring and management.

Bright People Technologies generated revenue of $4.9 million and EBITDA of $1.7 million in FY 2020. It counts the likes of BHP Group Ltd (ASX: BHP) and Woodside Petroleum Limited (ASX: WPL) as customers.

Management believes the combination of CV Check and Bright will create a credentials-based workforce management capability built on Bright’s workforce compliance strength and the CV Check platform’s highly automated verification workflows and HRIS integrations.

What are the terms?

The two parties have agreed a fee of $15.3 million. This comprises $12 million in CV Check shares (held in escrow until 31 December 2022) and $3.25 million to pay Bright People Technologies’ net debt.

Bright’s Chairman and largest shareholder, Jon Birman, will be appointed to the CV Check board as a Non-Executive Director. Fellow Executives, Petra Nelson and Declan Hoare, will join the CV Check Executive Management Team.

To fund part of the deal, the company has successfully completed a $10.5 million placement at an issue price of $0.165 per new share. This was a 5.7% discount to the last close price for CV Check shares.

The placement was well supported by new and existing institutional investors. This includes CV Check’s largest institutional investor, Australian Ethical Investment Limited (ASX: AEF).

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. and CV Check Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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