Dods Group PLC (LON:DODS) has confirmed the purchase of acquired data services and software code provider Meritgroup for £22.4mln just one day after the events and publishing firm revealed it was in advanced and exclusive discussions about the deal.
The AIM-listed group said it is paying a mixture of cash and new ordinary shares for the acquisition and is currently concluding an equity fundraising process in order to cover the cash portion of the consideration.
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As part of the fundraising, Dods said it expects to provide an open offer to enable existing shareholders the opportunity to participate. It also proposes to enter into a new debt facility to part fund the acquisition.
It added: “The Board is confident in a successful outcome of the Fundraise and Lord Ashcroft, a 44% shareholder, is fully supportive of the Acquisition.”
The firm - publisher of Dods Parliamentary Companion and the PoliticsHome website - said the Merit acquisition will be "transformational" for the group and will enable it, among other things, to diversify its service offering into faster growing, higher margin activities.
Merit – which was established in 2004 in the UK and India – has reported a compound annual growth rate (CAGR) of over 20% across the last three years and has been profitable for the past seven years.
In the financial year ended 31 December, Merit generated revenues of approximately £9.2mln, adjusted underlying earnings of around £1.9mln and pre-tax profit of about £1.2mln.
In early afternoon trading on Tuesday, shares in Dods were 6% higher at 8.75p, having gained around 3% on Monday.