Here’s why the Knosys (ASX:KNO) share price is flying today

This comes after the announcement of an acquisition.

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The Knosys Ltd (ASX: KNO) share price is flying more than 22% higher today.

Shares in the tech company are surging after announcing an acquisition earlier today.

Lets take a look at what Knosys is set to acquire and why shares in the company are flying.

Knosys shares jump on acquisition news

Knosys announced earlier today that the company will be acquiring library management software (LMS) business LIBERO.

According to the announcement, Knosys will acquire the LIBERO business through a share-sale agreement via a special purpose subsidiary.

The transaction will include $4 million in cash in addition to $1 million worth of fully paid ordinary shares in Knosys. The company noted that the acquisition will be funded from its existing cash resources.

Knosys noted that the acquisition is subject to the satisfaction of certain agreed conditions. Completion is expected to be no later than 31 August 2021.

Why is Knosys acquiring LIBERO?

In its investor presentation, Knosys noted that the strategic acquisition is in line with the company’s growth strategy to deliver multiple software-as-a-service (SaaS) product offerings.

Knosys highlighted LIBERO’s global revenue footprint, with 116 clients located across 8 countries. In addition, the company noted that the global market for LMS is expected to reach US$2.4 billion by 2024. Knosys also expects that over the next 5 years, there will be increased demand for newer library system technologies capable of integrating mobile end-user applications.

According to Knosys, the acquisition will result in an annualised recurring revenue (ARR) multiple of around 2.3 times.

More on Knosys

Knosys is a SaaS provider based in Australia that specialises in information technology. The company offers a range of software solutions designed to boost productivity, collaboration and connectivity. Knosys’ Knowledge IQ solutions and the GreenOrbit Intelligent Intranet solutions are 2 of its flagship products.

The company’s growth strategy is focused on enabling Knosys to scale its global operations, acquire new development capabilities. In addition to the expansion, the company also aims to maintain a cost-effective shared services model.

At the time of writing, shares in Knosys are trading more than 11% higher for the day at 15 cents. Shares in the company were up more than 22% earlier, hitting an intraday high of 16.5 cents.

Should you invest $1,000 in Knosys right now?

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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