LoopUp Group PLC (AIM:LOOP) said it is to buy SyncRTC Inc, a hybrid collaboration software-as-a-service technology company and raised £8.85mln to step up investment in cloud telephony and pay down debt.
SyncRTC, a specialist in remote education and corporate training, was bought for an enterprise value of US$4.5mln (£3.26mln) in cash and shares.
LoopUp will pay £2mln of the consideration by issuing 5.374mln shares on completion and pay £0.25mln in cash, as well as taking on SyncRTC’s £1mln in cash debt, £0.3mln it plans to clear post-acquisition.
LoopUp and its brokers, Cenkos and Panmure Gordon, also carried out an institutional placing and a PrimaryBid retail offer at a price of 25p per share overnight, a 31.5% discount to the closing price on 28 September.
The AIM-listed company said completion of the acquisition is expected on or around 1 October 2021 and is not conditional on the capital raising or on shareholder approval of the capital raising.
With gross cash of £6mln already in the bank, once the fundraising is complete, LoopUp plans to use around £0.55mln of the cash on the acquisition, £3.5mln to reduce debt, £3.5mln for working capital and £3.25mln to increase investment in its cloud telephony business.
The investment in cloud telephony follows what the company said is strong early commercial traction and success since launch of a product integrated with Microsoft Teams, which saw 15 new direct customers with a total contract value of £1.7mln won in the first half of the year, and a strong sales pipeline built up.
Believing the company has a differentiated solution versus carrier competition in the fastest growing segment of what is already a large cloud telephony market, the acquisition of US-headquartered SyncRTC is to expand its offer to companies in the ‘hybrid working’ market.
LoopUp said it has a longstanding relationship with SyncRTC's founder and chief executive, Victor Sanchez, who will become the group's chief technology officer (CTO) post acquisition.
At SyncRTC Sanchez and his 24-strong team have designed its 'mashme.io' platform and associated 'Room of the Future' solutions to create what LoopUp’s directors believe is “a best-in-class experience for larger scale hybrid education and corporate training implementations”.
With a customer base of approximately 30 education and corporate training customers including Said Business School at the University of Oxford, NYU Stern School of Business, Colorado State University, Saudi Aramco and Grupo Santander, SyncRTC reported revenue of US$2.1mln in 2020 and a loss of US$0.5mln compared to £1.52mln and £0.4mln the year before.
LoopUp said it expects a material proportion of SyncRTC's cost base to qualify for R&D tax credits, and on this basis SyncRTC would be cashflow positive for the group.
“Hybrid working is expected to become widespread in the post pandemic workplace, and the group believes that the opportunities for SyncRTC's technology will multiply in the post pandemic digital workplace,” the company said.
“SyncRTC brings meaningful differentiation to both LoopUp's Collaboration and Managed Events strategic rings by taking both into hybrid as well as purely virtual implementations.”
A total of 30,230,752 shares were placed by Cenkos and Panmure Gordon, and investors sourced by PrimaryBid subscribed for an aggregate of 5,169,248 further shares, all at the issue price.