Here's why the Reckon (ASX:RKN) share price has gained 25% this week

Novatti is standing by its intention to buy a strategic stake in Reckon despite its share price collapsing today

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The Reckon Limited (ASX: RKN) share price opened higher this morning after Novatti Group Ltd (ASX:NOV) broke its silence on its secret intent to purchase a strategic stake in Reckon. However, the Novatti share price flopped as it broke its trading halt.

Despite starting the day in the green, Reckon shares are now swapping hands for 99 cents – 1.49% less than their previous close.

Reckon's small dip is nothing compared to that of Novatti shares. At the time of writing, the Novatti share price has fallen 9.84% to trade for 58 cents.

Its drop came after Novatti announced its placement and share purchase plan to raise capital to acquire a stake in Reckon was successful.

Quick refresher

Novatti entered a trading halt on Wednesday as it raised capital to fund its growth strategy, part of which was to acquire at least 15% of Reckon's outstanding shares.

The trouble was, Reckon had no idea of Novatti's plans, despite Novatti claiming it had already entered an agreement for the purchase.

Novatti's alleged agreement involved it buying at least 17 million of Reckon's shares for $1 each.

Up until that point, the Reckon share price's 52-week high was 90.5 cents and it had closed the session prior at 79 cents. The news caused the Reckon share price to gain 21% on Wednesday.

Novatti to buy stake in Reckon

Novatti announced today it will be acquiring a 19.9% stake of Reckon, spending around $22.5 million to do so.

Reckon is yet to respond to Novatti's assertion it's acquiring a significant stake in the company.

Novatti said its acquisition of 19.9% of Reckon will benefit it as there's a "tight synergy" between business automation software – Reckon's area of business – and payment processing – Novatti's focus.

Novatti raked in $45 million in its capital raise by offering 72.7 million new shares for 55 cents apiece.

The company will use the remaining $22.5 million to fund its growth strategy, other strategic acquisitions, and to progress its bank licensing application.

Reckon share price snapshot

While Reckon was confused by this week's events, the market took advantage.

The Reckon share price has gained 24% this week – boosting its year-to-date gain to 28%.

It is also 45% higher than it was this time last year.

Reckon has a market capitalisation of around $113 million, with approximately 113 million shares outstanding.

Novatti share price snapshot

Luckily for the the Novatti share price, it has heaps of room to fall before it hits red.

Currently, the Novatti share price is 122% higher than it was at the start of 2021. It has also gained 65% since this time last year.

The company has a market capitalisation of around $156 million, with approximately 244 million shares outstanding.

Motley Fool contributor Brooke Cooper 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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