Life360 (ASX:360) share price jumps 9% to record high on acquisition news

The Life360 Inc (ASX:360) share price storming higher on Tuesday after announcing a new acquisition. Here’s what you need to know…

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The Life360 Inc (ASX: 360) share price has been a strong performer on Tuesday morning.

At the time of writing, family safety app company’s shares are up over 9% to a record high of $5.72.

Why is the Life360 share price on fire today?

Investors have been scrambling to buy the company’s shares this morning after it announced a potential acquisition.

According to the release, the company has entered into a non-binding term sheet for the acquisition of Jiobit for US$37 million. This could increase to US$54.5 million if certain performance targets are achieved in the two full calendar years following completion.

What is Jiobit?

Jiobit is a provider of wearable location devices for young children, pets, and seniors. It provides families a comprehensive location-aware safety solution that is accurate, secure, reliable and real-time.

This solution combines a discreet wearable called the Jiobit Location Monitor, with mobile-based software services, combined with patented location technology.

The release notes that Life360 has been monitoring this segment of the location awareness market for several years, knowing it would potentially accelerate its strategy to broaden market reach.

Management believes Jiobit’s combination of quality hardware, patented Progressive Beaconing proprietary connection technology and subscription-based real-time location awareness intersects with Life360’s high standards of performance and technology capability.

Furthermore, it is complementary to the company’s core mission of family operations, safety, and security. It also feels Jiobit will allow Life360 to tap into two fast growing markets: the multi-billion pet supplies and services and elder care markets.

Jiobit expects its total annualised revenue run rate for the month of December 2021 will be US$11.7 million. This comprises US$5.7 million of subscriptions and US$6 million from other sources, which primarily consists of hardware device sales.

Strategic review

Management notes that this proposed acquisition represents the first stage of the strategic review previously announced in February.

That review has seen the company execute a strategy to enlarge and enhance its core user base of families with teenagers by moving into both younger and older demographics.

With the launch of Membership in July 2020, Life360 made the initial step in this direction, offering a significantly enhanced suite of bundled products focused on the safety and security of the family.

Expanding into the complementary business of hardware-based location awareness is part of this broader strategy, extending Life360’s audience reach and opening up a new segment of younger, tech savvy parents with pre-teen kids, independent home living seniors, and pets.

Positively, by bundling Jiobit’s high value, low-cost physical device into Life360’s top membership tiers, it is expected to significantly boost both conversion and retention.

The Life360 share price is now up 47% since the start of 2021.

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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. recommends Life360, Inc. The Motley Fool Australia has no position in any of the stocks mentioned. 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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