The Domain Holdings Australia Ltd (ASX: DHG) share price won't be going anywhere on Friday.
This morning the property listings company requested a trading halt.
Why is the Domain share price in a trading halt?
The Domain share price was placed in a trading halt this morning so the company could launch an equity raising to fund a major acquisition.
According to the release, Domain has entered into an agreement to acquire 100% of Realbase for an enterprise value of $180 million, plus contingent consideration of up to $50 million.
The latter reflects the maximum earn out payments if Realbase delivers a fivefold increase in EBITDA by FY 2026 compared to FY 2022.
What is Realbase?
Realbase is a leading campaign management technology platform in the Australia and New Zealand region.
Management believes it is a highly strategic acquisition which provides complementary Marketplace offerings that progress Domain's strategy to deliver solutions that help agents and consumers at every stage of the property journey.
Furthermore, it is expected to significantly accelerate Domain's Agent Solutions strategy and increase market coverage from ~35% to ~50% of all Australian property transactions.
Management also sees potential to unlock significant pre-tax EBITDA synergies and scaling efficiencies of up to approximately $18 million per annum by FY 2026.
Domain's CEO, Jason Pellegrino, is very positive on the acquisition. He commented:
"Our mission in Agent Solutions is to build on our track record of trusted partnerships with agents to help them build profitable and sustainable businesses, and deliver value at every stage of the property journey. For some time we have been impressed by Realbase's technological capabilities and products including innovative campaign management, high growth digital proposals and a rapidly expanding social media marketing offer.
Each of Realbase's solutions complements and extends the value proposition Domain can take to agents. The acquisition of Realbase meaningfully increases the scale and impact of Domain's Agent Solutions unit and strengthens our position as the leading provider of end-to-end agent workflow solutions."
Equity raising
The acquisition of Realbase will be funded via a $180 million underwritten pro-rata accelerated non-renounceable entitlement offer.
These funds will be raised at $3.80 per new share, which represents a 5.2% discount to the current Domain share price.
The release notes that the company's largest shareholder, Nine Entertainment Co Holdings Ltd (ASX: NEC), is supportive of the acquisition and equity raising and has committed to take up 100% of its entitlement. This represents approximately 59% of the equity raising.
The Domain share price is expected to return to trade on Tuesday of next week.
