Here we cover the moving parts of the deal and how the market has reacted so far.
But first, quick recap on Dicker Data
Dicker Data is a wholesale distributor of computer hardware and software products.
It has a footprint in Australia and New Zealand, although derives most of its revenue in Australia.
At the time of writing, Dicker Data has a market capitalisation of $2 billion.
Dicker to acquire Exeed Group
On 30 July Dicker announced it had entered into a binding agreement to acquire IT distribution company Exeed Group for $68 million.
The transaction would be finalised under a supported cash advance facility from Westpac bank. Dicker anticipates completing the transaction by the end of August.
Buying Exeed Group is a “very satisfying outcome” for Dicker, according to its chair and CEO David Dicker, who also believes the “combined companies are highly synergistic”.
As a result of the Exeed acquisition, the company gains access to revenue of NZD$310 million, alongside NZD$70 million in Australia.
Furthermore, Dicker Data anticipates the transaction will “propel Dicker Data NZ to become the second largest IT distributor in New Zealand”. Dicker forecasts combined revenue of NZD$500 million for the merged companies.
Investors have jumped on Dicker shares since the market open, viewing the news as a favourable outcome for the company.
Dicker shares are now exchanging hands at $12.85 apiece, an 11% jump from market open, and also setting a record high.
Dicker Data share price snapshot
The Dicker Data share price has posted a year to date return of 23%, extending the previous 12 month’s return of 69%. In the past month, Dicker shares have climbed 16% into the green.
These returns have outpaced the S&P / ASX 200 index (ASX: XJO)’s return of around 23% over the past year.