LoopUp (LOOP), the remote meetings software group, plans to acquire Warwick HoldCo Limited – the holding company for the MeetingZone Group, a UK-based conferencing services provider. LoopUp will pay £61.4m in cash; a significant amount, considering its own market capitalisation of £195m. Indeed, the acquisition constitutes a reverse takeover.
The transaction will be funded via a £50m share placing of 12.5m shares at 400p each, and by a new £17m term loan from Bank of Ireland. LoopUp can also access a £3m revolving credit facility provided by Bank of Ireland, although this will not initially be drawn.
What’s the rationale behind this deal? Among other advantages, management points to “material earnings enhancement”, enabled partly by expected cost synergies. New equity issued to finance the acquisition will also bolster the group’s free float – the shares in public hands – which could improve liquidity.
