The Nitro Software Ltd (ASX: NTO) share price won’t be going anywhere on Wednesday.
This morning the global document productivity software company requested a trading halt.
Why is the Nitro share price halted?
The Nitro share price was halted this morning after the company announced a major new acquisition and accompanying equity raising.
According to the release, the company has entered into a binding agreement to acquire Connective NV for an enterprise value of €70 million (~US$81 million or ~A$110 million).
Connective is Belgium’s leading eSign software-as-a-service (SaaS) business, with a fast-growing market share in France and customers in 11 other European countries.
Its business focuses on serving the needs of enterprise and government customers that require high levels of trust, security, and regulatory compliance, while also offering expansive electronic identity (eID) support and a powerful document workflow automation solution.
Connective is forecast to achieve annual recurring revenue (ARR) of ~US$6.1 million and revenues of ~US$7.1 million in calendar year 2021.
Management believes the acquisition cements Nitro’s position as a global eSign and document productivity SaaS platform.
Nitro’s Co-Founder and Chief Executive Officer, Sam Chandler, commented: “This is a milestone moment in Nitro’s growth story. With the acquisition of Connective, Nitro is well placed to become the third global player in the fast-growing enterprise eSign market.”
“Connective adds highly secure, enterprise-grade eSigning, eID and workflow capabilities to Nitro’s existing eSign solutions at a time where increased trust, security, and regulatory compliance are vital to business success. With data security at a premium, the future of eSigning is built around hightrust eID-driven solutions, and this acquisition positions Nitro to become a global leader,” he added.
In order to fund the acquisition, Nitro is raising A$140 million via a fully underwritten equity raising. This comprises an $80 million institutional placement and a $60 million entitlement offer.
These funds will be raised at $3.43 per new share, which represents a 10.7% discount to the Nitro share price at the close of play on Tuesday.