Online visual merchandising specialist ATTRAQT Group plc (LON:ATQT) has pulled off a real coup, acquiring ASOS account holder Fredhopper for £25mln.
Fredhopper, a division of SDL Plc (LON:SDL), is a cloud-based provider of onsite search, navigation, recommendation and visual merchandising solutions through a global software-as-a-service (SaaS) platform.
The size of the acquisition means it counts as a reverse takeover under Aim’s rules and, accordingly, trading in ATTRAQT has been suspended. At the time the shares were suspended (at 46.11p), ATTRAQT was valued at £13mln.
WATCH: ATTRAQT boss on "very good" acquisition ...
The acquisition will be financed by a firm placing and open offer of ATTRAQT shares at 35p a pop, raising £28.5mln. The open offer part of the fund-raising will raise around £1mln.
The proceeds from the share issue will not only fund the acquisition but will finance the integration of the two businesses, investment in sales and marketing, customer support and product development.
Any money left over will augment working capital.
The directors of ATTRAQT believe that apart from Fredhopper and ATTRAQT, no other competitor provides all three of the following technologies: site search; visual merchandising; and product recommendation in one integrated platform.
Fredhopper has a large recurring revenue base that accounted for 90% of total revenues in fiscal 2016.
It has a considerable number of long-standing key customer relationships, the best known of which is probably online clothing operator ASOS.
"As independent companies, ATTRAQT and Fredhopper have each built strong reputations, delivering products that significantly improve conversion rates and increase sales for their 250 e-commerce retail customers,” said Nick Habgood, chairman of ATTRAQT.
“Bringing the two businesses together will allow us to accelerate investment in sales and marketing, customer support and in on-going product development. Increasing our presence in the important North America market is a particular focus. Our objective is to deliver strong profitable growth whilst becoming a global technology partner of choice to leading online retailers," Habgood said.
ATTRAQT also released its results for 2016, in which it said revenue grew 22% to £3.6mln from £2.9mln the year before.
Recurring revenue increased 22% to £3.2mln from £2.7mln in 2015.
Adjusted underlying losses (LBITDA) in 2016 were in line with expectations at £1.l6mln, reflecting the accelerated investment in the business.
Loss before tax widened to £1.l9mln from £700,000 the year before.
The company ended the year with £1.2mln, down from £3.0mln the year before.
"I'm pleased to report another year of good progress with the group continuing to grow both its revenues and client base in the UK and North America, whilst at the same time increasing gross margin. We have signed 42 new deals in the period, including several large global retailers and have delivered a 22% increase in revenue for the year,” said Andre Brown, chief executive officer of ATTRAQT.
"Our objective is to deliver strong profitable growth by becoming the clear global leader in online visual merchandising. With an exit rate of £3.9mln, good growth in recurring revenue and a strong sales pipeline for H1 2017, we are confident in the continued success of ATTRAQT for 2017 and the foreseeable future," he added.