Here’s why the iCandy (ASX:ICI) share price is having such a sweet ride today

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The iCandy Interactive Ltd (ASX: ICI) share price is surging 16.3% in afternoon trade after coming out of yesterday’s trading halt.

Trading was paused at the company’s request pending today’s twin announcements of a new acquisition and a capital raising.

We take a look at both those announcements from the ASX video game developer below.

First, the acquisition…

iCandy share price lifts on acquisition announcement

The iCandy share price is marching higher after the company reported it will acquire 100% of Lemon Sky Studios. The southeast Asia-based game art and animation company was already a joint venture (JV) partner with iCandy in developing a AAA-style mobile game.

Lemon Sky’s existing portfolio of partnerships includes: EA Entertainment, Microsoft Studios, Disney, Nickelodeon, Blizzard Entertainment, Naughty Dog, 2K Games, Square-Enix, and Bandai Namco.

iCandy will pay AU$44.5 million (MYR135 million) for the acquisition, in both cash and new iCandy shares.

The $17.8 million in cash payment will be settled over the next 6 months.

The remaining $26.7 million will be paid for via a new share issue, valuing the iCandy share price at 11 cents per share. That’s about where the company began the week, but well below the current 16 cents per share.

The company said it would fund the transaction with existing working capital along with the funds from its capital raising, the details of which were also released today.

It expects the acquisition to be completed inside 3 months.

What capital raising was announced?

iCandy reported its $40 million capital raising was oversubscribed after receiving firm commitments from institutional investors.

New shares will be issued at 11.5 cents per share.

Global gaming company, Animoca Brands, increased its existing 7% stake in iCandy with an additional $10 million investment commitment.

The placement will take place in 2 tranches.

The first tranche will raise $16.77 million via the issue of approximately 145.8 million new shares.

The second tranche will be completed subject to shareholder approval. iCandy said it will schedule an Extraordinary General Meeting “as soon as possible to also approve the acquisition of Lemon Sky Studios”.

Upon approval, the second tranche will raise $23.23 million, with shares also issued at 11.5 cents.

iCandy share price snapshot

With today’s intraday gains factored in, the iCandy share price is up11% in 2021. That’s right in line with the year-to-date gain of 10% posted by the All Ordinaries Index (ASX: XAO).

Over the past month iCandy shares have leapt 74% higher.

Should you invest $1,000 in iCandy right now?

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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