Way2VAT Ltd (ASX:W2V) has entered a binding share sale agreement to fully acquire DevoluIVA SLU, a Spanish company that offers comprehensive management of corporate expenses and the automatic recovery of national Value Added Tax (VAT) services through an established network of more than 130,000 merchants.
Under the agreement W2V will offer A$1.45 million (€1 million) in initial consideration in the form of 11.76 million shares based on a deemed issue price of A$0.125 per share, subject to shareholder approval.
The acquisition offers Way2VAT an opportunity to enter the Spanish market, while also representing complementary domestic and foreign VAT and accounts payable services and a rollout of the world's first Smart Spend Debit Mastercard through an established national network.
Actioning multi-product strategy
“The acquisition provides four key benefits to Way2VAT,” Way2VAT CEO and founder Amos Simantov said.
“First, it enables Way2VAT to enter the Spanish market with a complementary product suite to the existing DevoluIVA platform.
“DevoluIVA’s expertise on the unique characteristics of the Spanish domestic VAT system is the perfect way for us to then offer our foreign VAT capability.
“Second, it provides a large market for our Smart Spend Debit Card that can be pushed through to DevoluIVA's network of more than 130,000 merchants.
“Third, the acquisition is revenue accretive and will have an immediate effect on Way2VAT revenue and EBITDA.
“Finally, the acquisition provides the basis for our multi-product strategy beyond Spain and into Latin American countries with similar domestic VAT structures.”
W2V expects the acquisition to be revenue accretive; DevoluIVA has recorded unaudited revenues of about A$290,000 for the quarter ending in June, and is expected to provide positive cash flow after the acquisition completes.
The agreement will also provide a path to integrate the Way2VAT and DevoluIVA platforms and achieve improved operational and financial scale, effect and margins.