The Bigtincan Holdings Ltd (ASX: BTH) share price won't be going anywhere on Monday morning.
This morning the sales enablement-focused software company requested a trading halt.
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Why is the Bigtincan share price halted?
The Bigtincan share price was halted this morning so the company could undertake an equity raising to fund a major acquisition.
According to the release, the company is seeking to raise $135.3 million. This comprises a placement to U.S. based investment firm SQN Investors of $21 million and an underwritten 1 for 4 accelerated pro-rata non-renounceable entitlement offer to raise approximately $114.3 million.
The equity raising is being conducted at an offer price of $1.05 per share, which represents a 12.1% discount to the Bigtincan share price at Friday's close.
Why is Bigtincan raising funds?
Bigtincan is raising the funds after entering into a merger agreement to acquire 100% of the issued securities of Brainshark, Inc. for US$86 million (A$116 million). The release notes that Massachusetts based Brainshark is an industry-recognised and multi-awarded leader in its field of sales coaching, learning and readiness.
The acquisition price of A$116 million represents an acquisition multiple of 2.5x estimated sustainable annualised recurring revenue (ARR) of ~A$46 million. In light of this, Bigtincan estimates that combined FY 2022 ARR will meet or exceed A$119 million.
This will be a big lift year on year. For example, Bigtincan recently revealed that it achieved A$53.1 million in ARR in FY 2021. That was an increase of 48% from FY 2020's ARR of $35.8 million.
Management advised that it believes Brainshark is a strong fit across all of Bigtincan's acquisition criteria, transforming the combined business to a global leader in the sales enablement market with significant scale.
The Bigtincan share price is up 36% since this time last year.
