Pointerra (ASX:3DP) share price plummets 10% on acquisition news

The Pointerra Ltd (ASX: 3DP) share price is plunging today after the data technology company announced it is buying a US drone business.

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The Pointerra Ltd (ASX: 3DP) share price is unmoved despite the data technology company announcing today it is purchasing a US drone business.

At the time of writing, shares in the company are trading for 67.5 cents each – down 10.6% on yesterday’s close. By comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.62% lower.

Let’s take a closer examination of the acquisition.

What’s going on with the Pointerra share price?

In a statement to the ASX, Pointerra declared it has signed a non-binding agreement to buy US drone-based digital asset management business Airovant LLC.

Pointerra will issue US$1 million in ordinary shares to Airovant, as well as 2 million ordinary shares to each of the four founders of the company being acquired, to complete the procurement.

Airovant is a digital data as a service (DaaS) business for customers wishing to have a “digital representation” of worksites and assets. Using a mixture of 2D images (captured from the ground and the air via drones) and 3D modelling, customers are given “actionable intelligence” to aid in their decision-making around their assets. Between the years 2018 and 2020, Airovant’s annual revenue averaged US $1.4 million and the company had positive cash flow.

In its statement, Pointerra said it made the decision to purchase Airovant after working with the company in the US over the last few years. Along with the actual business, Pointerra highlighted the fact Airovant’s human resources and existing customer base will also become a part of its business.

Investors appear to be unimpressed with the news, judging by the Pointerra share price.

Pointerra says it sees opportunities for further expansion in the US. The company says the growing construction, mining, energy, and other sectors are opportune for it. As well, it says it can benefit from government investment in infrastructure at a local, state, and federal level. Infrastructure spending is key part of the US’ economic response to the COVID-19 pandemic.

Management commentary

Pointerra managing director Ian Olson said:

Attracting the Airovant team to potentially bolster our US and global operations will also deliver new customers, revenue and ACV contribution – we couldn’t be happier with the potential acquisition.

Airovant CEO Jonathan Montague added:

Airovant is thrilled with the opportunity to join the Pointerra team and combine our product lines. Increasingly, critical business decisions are made using digital asset data, which requires an easy to use yet powerful platform solution to enable all stakeholders to make informed decisions around their operations.

Pointerra’s platform technology truly enables the digital experience for asset management that is increasingly performed leveraging remotely accessed solutions in a safe and effective manner. Across multiple verticals, our customers will benefit from the increased capability and expanded feature-sets adding deeper value to their businesses. The integration of Airovant’s core founder team with Pointerra will also synergistically accelerate the growth of segment-specific data solutions within the Pointerra ecosystem.

Pointerra share price snapshot

Over the past 12 months, the Pointerra share price has rocketed 1,710%. Only last week, the company’s value increased by 28% in a day after exceptional sales results for Q3.

Pointerra has a market capitalisation of $509.8 million.

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Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Pointerra Limited. The Motley Fool Australia has recommended Pointerra Limited. 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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