PriceSensitive

TPS seal $35.8M competitor purchase

Finance
ASX:TPS
01 May 2019 02:15 (AEST)

Home and Business security system providers Threat Protect has completed the purchase of smart-home security competitor company Onwatch.

Threat Protect paid Onwatch $32.2 million in cash and eight million Threat Protect shares valued at $0.25 per share. Cash payment also included a bonus of $1.5 million of deferred consideration, payable 12 months from the date of acquisition.

Onwatch provide 24/7 smart internet-integrated home security solutions. The company also boasts a tie-in phone app ‘Direct Wireless’, allowing users to control home security systems remotely through their phone.

Threat Protect’s annual recurring revenue will increase to $12 million, totalling to $24 million a year. The company expects earnings performance to be affected immediately.

The purchase represents the largest company buy-out to date for Threat Protect. Onwatch has been operating since 2006 and currently has 29,000 accounts of subscribed users.

Threat Protect Managing Director Demetrios Pynes says the deal allows the company to capitalise on previous expansion in East coast Australia and expand further into Victoria through direct consumers and resellers.

“New monitoring revenue streams and cost and diversification benefits will add to the bottom line for Threat Protect shareholders whilst the extra funding secured from Soliton will ensure our acquisition path can continue with confidence” he said.

The company initially announced the purchase deal in March earlier this year. Afterwards, Threat Protect issued a $5.4 million underwritten rights issue to shareholders at $0.25 per share.

The company underwent major debt reconstruction to facilitate the deal, entering a Note Subscription Agreement with Soliton Capital Partners at $36 million and a signed $8 million unsecured debt facility with First Samuel Limited.

The company converted the notes issued to First Samuel into 42,857,153 shares at an issue of $0.21 per share. First Samuel now owns 39.05 per cent issued capital.

Threat Protect sits at a $28.96 million market cap this morning, trading shares at $0.19 a piece.

Please see announcement for further details

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