Damstra (ASX:DTC) share price soars 10% on acquisition news

The technology company is having a good day.

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The Damstra Holdings Ltd (ASX: DTC) share price has burst out of the gate in today's session.

Shares in the tech company are flying higher following the announcement of an acquisition.

Let's take a look at why investors are bidding the Damstra share price higher today.  

Damstra share price flies on TIKS Solutions acquisition

Shares in Damstra are flying today after the company announced a key acquisition.

The tech company publicised that it has entered into a share sale agreement to acquire 100% of the shares in TIKS Solutions Pty Ltd (TIKS).

TIKS is an Australia-based workplace safety and compliance management company, with approximately 70 clients across a wide range of sectors.  

Damstra provided several highlights on the management company's performance in FY21.

TIKS was able to generate audited revenue of $4.14 million for the full-year and remained free cash positive.

As a result, the acquisition is not expected to negatively impact Damstra's FY22 operating cash flow.

According to the update, the acquisition will comprise $2.5 million in cash from Damstra's existing cash reserves.

In addition, Damstra will issue an equivalent of $12 million in its shares, with a further $3.5 million in cash to be paid 12 months after completion.

Damstra noted that the acquisition is in line with the company's strategy to pursue inorganic opportunities and consolidate existing markets.

Damstra's CEO, Christian Damstra, commented:

TIKS is an exciting natural fit for Damstra that will bring further scale to our business, enhancing our leadership position in workforce management in Australia and expanding our international footprint.

How did Damstra perform in FY21?

The Damstra share price has struggled since reporting its full-year results for FY21.

Highlights from the company's report included;

For FY22, Damstra has renewed its aim to break even in free cash flow and realise cash synergies from its acquisition of Vault Intelligence Ltd (ASX: VLT) late last year.

Snapshot of the Damstra share price

Shares in Damstra have tanked more than 40% since the start of the year.

However, today's announcement has reignited interest in the company's share price.

At the time of writing the Damstra share price is trading more than 10% higher for the day at around 95 cents.

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. owns shares of and has recommended Damstra Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Damstra Holdings Ltd. 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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