- Codan (CDA) has entered into an agreement to acquire U.S.-based technology provider Domo Tactical Communications
- The acquisition requires an upfront payment of US$88 million (approximately A$114 million) with the possibility of an additional payment of up to US$16 million (around A$20.5 million) if certain earn-out targets are achieved in 2021
- The buyout will be fully funded from existing cash reserves
- The deal is on a cash free, debt free basis and is expected to be complete by 30 April 2021
- Codan is up 6.92 per cent, trading at $13.29
Codan (CDA) has entered into an agreement to acquire U.S.-based Domo Tactical Communications (DTC).
Headquartered in the U.S., DTC is a technology provider for high bandwidth wireless communications with specialist capabilities in MIMO Mesh networks.
The company provides wireless transmission of video and other data applications to more than 20 key U.S. government agencies, including military and special forces, intelligence agencies, border control, first responders and broadcasters.
The acquisition requires an upfront payment of US$88 million (approximately A$114 million) with the possibility of an additional payment of up to US$16 million (around A$20.5 million) if certain earn-out targets are achieved in the 2021 calendar year.
The acquisition is on a cash free, debt free basis and is expected to be completed by 30 April 2021.
In the first full year of Codan’s ownership, DTC is expected to contribute around $90 million of sales, $14 million in EBITDA and $9 million profit before tax. As a result of the transaction, Codan will acquire total assets approximately equal to the purchase price with no change to Codan’s shareholder equity.
The acquisition will be fully funded from existing cash reserves.
“The acquisition of DTC is consistent with Codan’s well publicised strategic growth plan for our Tactical Communications business. This is focussed on providing total communications solutions by transitioning from a traditional voice only platform via the addition of data and video communication capabilities,” said Chief Executive, Donald McGurk.
“This acquisition fills a technology gap and will be able to leverage Codan’s global distribution channels into the developing world. Importantly this transaction will be accretive for Codan shareholders from the outset.”
Codan is up 6.92 per cent, trading at $13.29 at 1:32 pm AEDT.