OSLO: Norwegian technology company Elop has signed a letter of intent to acquire 100 percent of the shares in artificial intelligence company Simplifai, a news release said.

The partnership will enable an acceleration of Elop’s development of data driven services for monitoring and maintenance of infrastructure.

“The partnership with Simplifai reinforces our ambition of becoming a growth company that offers data-driven solutions for better insight and optimised maintenance of critical infrastructure,” says Kjersti Kanne, CEO of Elop.

With a vision of providing asset owners with solutions that improve safety, extend asset lifetime, and minimise total lifecycle cost and environmental footprint, Elop has developed and patented an ultrasound technology for inspection and analysis of critical infrastructure.

Elop’s ultrasound scanner and cloud-based solution is on track to be launched commercially in December this year.

The ultrasound scanner immediately helps to identify issues that owners of critical infrastructure must address, an offering that until now has not been available in the market. However, as communicated at the IPO in June, the major long-term value for Elop, asset owners and society as a whole is the data gathering that enables long term monitoring of critical infrastructure. The latter is a vehicle to transform data into unique insight that enables optimised asset management for safer and greener constructions.

Through partnering with Simplifai, Elop obtains technological and commercial resources that enable the company to move faster towards a commercially viable data driven, cloud-based software as a service business model.

Elop’s strategic partnership with Cognite continues as earlier announced, where Elop is developing software solutions on top of Cognite’s industrially specialized data platform.

“Our focus is that our earnings mix shall gradually shift towards recurring revenue, through usage-based licensing fees. The partnership with Simplifai provides access to technology and competence that increases the robustness of this business case, in addition to being an attractive investment on a stand-alone basis,” adds Kjersti Kanne.

Simplifai develops automation solutions using artificial intelligence to help its clients grow and cut costs. Its business concept is to develop automation systems that give business managers one tool to extract the value from all their existing systems.

Following the transaction, Simplifai will remain a stand-alone business, continuing its growth trajectory in delivering artificial intelligence solutions to a variety of industries, including the banking, financial services and insurance sectors. Shortly after the amalgamation, ELOP will strive to give its existing customer base of asset owners and inspectors access to Simplifai products.

“We will continue to develop the strong position we have built up within banking and finance – a sector that represents significant growth opportunities for us. However, the partnership with Elop also provides us with quick access to a highly interesting and under-digitalised construction industry,” says Bård Myrstad, CEO of Simplifai.

The company was founded in 2017 and has grown considerably since its inception. Today, Simplifai operates globally and employs 70 people at offices in Norway, India and Ukraine. It expects to generate revenues of approximately NOK 11 million in 2020, significantly increasing its recurring revenue share. The company has recently entered into several platform distribution agreements which is expected to generate a growth of NOK 15 million in recurring revenue per year, with full effect from H2 2021.

The agreed Letter of Intent between Elop and Simplifai is based on Elop taking over all the shares of Simplifai in a 100 percent share-based deal. Simplifai’s shareholders will receive a consideration reflecting an ownership of 22 percent of the shares in the combined company after completion. The valuation principles in the letter of intent are based on corresponding, long term growth forecasts for both companies, with revenue and profitability to a large degree driven by software services.

The parties are now moving on to negotiating a final share purchase agreement, which is expected to be signed this quarter. The transaction is conditional on successful due diligence of Simplifai, Board approvals by Elop and Simplifai, and an extraordinary general meeting in Elop.

Pareto Securities has acted as financial advisor to Elop in connection with the acquisition.