Life360 (ASX:360) share price halted amid $280 million acquisition

The tie-up with US company Tile will enable location-based finding of people, pets, and things…

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The Life360 Inc (ASX: 360) share price was halted from the open today. This comes after a company announcement on a strategic acquisition and equity raising.

The Life360 share price was $13.51 before the company requested a pause in trading on its shares.

Here are the details.

Strategic acquisition and equity raising

Life360 advised it has entered into a binding agreement to acquire 100% of the “cloud-based finding platform” Tile. The deal was settled for a total consideration of approximately $282.8 million. The purchase price includes US$35 million in retention awards for Tile employees.

Tile was founded in 2012 and is based in California. It is reported to be the “global leader in finding things and locates millions of unique items every day”.

Life360 notes that Tile offers a range of ‘Tile trackers’ that vary in size and can be attached to products such as electronics, backpacks, and keys – a key differentiator from competitors.

According to Life360, the combination of its family safety platform and Tile’s business model “creates an integrated market leader in location solutions for all life stages, enabling a seamless experience for families that integrates people, pets, and things”.

Life360 will pay the $282.8 million deal by way of cash and up to US$37.6 million of new Life360 shares issued to Tile shareholders.

The total consideration represents a CY21 revenue multiple of approximately 1.5x before any earn-out payment; or approximately 2.0x assuming the earn-out is paid in full and inclusive of the retention awards, per the release.

To finance the deal, Life360 will undertake a fully underwritten equity raising to institutional investors. In total, the entitlement offer and institutional placement will raise gross proceeds of around $280 million.

Investors can expect the transaction to settle in Q1 2021, according to the announcement.

Life360 also reiterated guidance of annualised monthly revenue by December 2021 in the range of US$125–130 million for its core business.

Management commentary

Speaking on the announcement, Life360 co-founder and CEO Chris Hulls said:

This is genuinely the most impactful deal in our company’s history, and along with our Jiobit acquisition from earlier this year, our vision of linking people, pets and things all in one place is now complete. As some backstory, I met the company’s co-founders, Nick Evans and Mike Farley, back in 2014. We connected immediately because it was clear to us that we would either be working together or be competitors at some point in the future, as we both had what I’ll call the religious belief that location would be part of everything. We had the platform of mobile phones covering people. They had the hardware device covering things.

Life360 share price snapshot

In the past 12 months, the Life360 share price has soared by more than 252%. It has also rallied 255% this year to date.

In the past month, it has climbed almost 43% and is up 3% in the last week. For comparison, the S&P/ASX 200 index (ASX: XJO) is up around 12% in the past year.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Life360, Inc. 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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