Bigtincan (ASX:BTH) share price halted ahead of $116 million Brainshark acquisition

Bigtincan is making a major acquisition…

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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.

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.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended BIGTINCAN FPO. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. 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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