Shearwater Group plc (LON:SWG) – the renamed and refocusing resources junior Aurum Mining – has revealed its first purchase under its new management, with the reverse takeover of authentication software firm SecurEnvoy Ltd.
The AIM-listed firm is to acquire SecurEnvoy for £20mln, to be satisfied by £10mln in cash and £10mln through the issue of 200mln new Shearwater shares at a price of 5p each.
The group said it will help fund the deal through a cash-raising – with £8mln sought via a placing of up to 200mln shares at a price of 4p each, and a proposed open offer to shareholders of up to 25.5mln shares at the same price to raise up to another £1mln.
In reaction to that discounted cash call, Shearwater shares fell back to 4.45p in late morning trading, down nearly 9% on yesterday’s close.
In a statement, Shearwater chairman David Williams said: "I am delighted we have reached agreement to acquire SecurEnvoy.
“It is an example of a great British business with a fantastic history of innovation under Andy and Steve's stewardship and we are thrilled they have agreed to join Shearwater Group.”
He added: “For us, this represents a very important first step in our ambitious growth plans, and is an excellent example of the type of business and team we wish to partner with."
SecurEnvoy co-founders "excited" about future as part of Shearwater
SecurEnvoy co-founders, Andy Kemshall and Steve Watts, will remain with the company.
They said: "For us, it was vital that we found a partner that shared our vision for the business and could support us on the next stage of our journey. Their strategy for building a digital resilience group resonated well with us and we are excited about our future as part of Shearwater Group.”
SecurEnvoy reported underlying earnings (EBITDA) of £2.2mln on revenue of £3.2mln in 2016.
Shearwater announced its name change on December 21 as it also unveiled a placing of up to 150mln shares also at a price of 4p each, in order to raise £6mln to fund its initial pipeline of acquisition targets.
The group also said then that it plans to divest its existing mining assets over the coming months, although later in the month it said in may retain some sort of carried interest in its Spanish gold portfolio.
Shearwater’s move into cyber security is far from unexpected with the group having recruited high-profile figures from the aerospace, defence and cyber sectors late last year.
In October, the firm named Michael Stevens, the former head of international market development for Airbus Defence and Space, as its chief executive.
Later that month, it appointed Stephen Ball, previously UK chief executive of US defence giant Lockheed Martin and a former chief executive of GCHQ, and Robin Southwell, the former chief executive of Airbus UK, both as non-executive directors.
Shearwater’s chairman, Williams is known in the City for turning his investment vehicle Marwyn into a £1bln-valued quarrying and aggregates business, Breedon Group PLC (LON:BREE), through some aggressive acquisitions.