LINK Mobility to acquire a leading US based CPaaS provider for $260 million

To accelerate LINK’s strategic expansion into the rapidly growing CPaaS market in North America.

OSLO, NORWAY: LINK Mobility is in exclusive negotiations to acquire a leading US based CPaaS provider, to accelerate LINK’s strategic expansion into the rapidly growing CPaaS market in North America.

The proposed acquisition will add an estimated NOK 232 million and NOK 143 million to LTM pro forma 1Q21 gross profit and cash EBITDA respectively.

The target company has an established track record of delivering outstanding organic growth with sales, gross profit and EBITDA increasing at a CAGR of 65%, 69% and 123% respectively between 2018 and 2020 and a proven ability to scale up the business as demonstrated by an EBITDA margin which has steadily increased to c.55% over the past two years.

The Acquisition will be immediately accretive, increasing LINK’s EBITDA margin for 2020 on a combined basis by over +400 basis points. The proposed Acquisition is expected to add an estimated NOK 285 million (c.86% margin) and NOK 200 million (c.60% margin) to LINK’s 2021 gross profit and cash EBITDA respectively.

The agreed purchase price for the target company is USD 260 million and will be settled by USD 68 million in LINK shares to be issued at the 10-day VWAP (volume-weighted average price) per share before signing and USD 192 million in cash which will be financed through a tap issue of LINK’s 5-year senior unsecured fixed rate bond issue (ISIN: NO0010911506).

The consideration shares to be issued to the sellers will be subject to a 6-month lock-up from closing, however, 34% of the consideration shares will be released from the lock-up on 1 November 2021 to satisfy tax obligations of the sellers.

If successful, LINK is expected to issue a total of approximately 105.2 million shares for settlement of the Acquisition and the contemplated acquisition of Soprano Design Ltd. (Soprano), which represents 69% of the combined purchase price for the two companies.

ABG Sundal Collier and Danske Bank are mandated to arrange a series of fixed income investor calls commencing on 14 June 2021. A tap issue of the LINK 5-year senior unsecured bond issue of EUR 170 million may follow, subject to inter alia market conditions.

LINK will in connection with the tap issue request an increase of the borrowing limit of the existing bond from EUR 350 million to EUR 370 million. LINK will also request a temporary waiver in respect of the Incurrence Test for incurrence of additional Financial Indebtedness, to allow such additional Financial Indebtedness up to a Leverage Ratio of 5.1x in connection with settlement of the contemplated Acquisition.

Following the Acquisition and the acquisition of Soprano (if successful), LINK expects the Leverage Ratio to be approximately 4.2x. Post the Acquisition, LINK has a strong cash position of NOK 649 million and expects to see a further de-leveraging down towards 3.5x at the end of 2021. LINK retains its financial target of net debt/adjusted EBITDA below 3.5x. The company will hence strive to deleverage quickly and then maintain a leverage ratio below 3.5x.

The Acquisition is expected to be signed and completed shortly after closing of the tap issue and approval of the waiver. If signed, completion of the Acquisition is limited to certain minor customary conditions to closing. No US regulatory governmental approvals are expected to be required. However, no assurance can be given to the effect that the Acquisition will not be delayed or that it will take place at all.

In the event of successful tap issue and signing of a definitive agreement for the Acquisition, LINK will following signing and announcement of the potential Acquisition arrange for investor meetings and investor calls.

LINK Mobility Group Holding ASA

3.36 EUR +0.13 (4.09%)

today

14 Jun, 8:21 am GMT+2 · Disclaimer

FRA: L1N

www.linkmobility.com

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