The Reckon Limited (ASX: RKN) share price is rocketing higher in early trade.
Reckon shares are defying the broader sell-off, currently up 49.71% to $1.31.
Here's what's driving investor interest in the ASX software solutions provider today.
What did Reckon announce?
The Reckon share price is off to the races after the company reported it has entered into a sales agreement with international consortium Access Group.
Subject to Australian regulatory approvals, Access will buy Reckon's Accountants Practice Management Group for $100 million cash.
That price equates to 4.6 times the 2021 financial year revenue for the Accountants Practice Management Group and 8.4 times its earnings before interest, taxes, depreciation, and amortisation (EBITDA).
Investors may also be bidding up the Reckon share price after the company reported it intends to return the majority of the sales proceeds to shareholders via a partially franked special dividend.
Reckon also plans to strengthen its balance sheet by repaying some of its outstanding debt.
Commenting on the sale, Reckon CEO Sam Allert said:
The sale agreement with Access Group represents a compelling offer, which we believe is in the best interests of our shareholders. The transaction unlocks significant value for shareholders.
Reckon will be in a stronger position to focus on and invest in the growth and development of the Business and Legal Groups, should the transaction complete. These divisions represented approximately 70% of the company's revenue and 60% of the company's EBITDA prior to this transaction and we believe have significant upside.
This transaction would allow us to focus on our remaining business divisions.
Reckon expects the transaction to be completed within the next three months.
Reckon share price snapshot
Today's big surge has lifted the Reckon share price well into the green for 2022, up around 40%. That compares quite favourably to the 8.2% year-to-date loss posted by the All Ordinaries Index (ASX: XAO).
