No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Netcall announced the acquisition of Jadu Holdings in a deal valued at up to 19.2m on Wednesday, expanding its footprint in UK local government and adding new digital experience and artificial intelligence capabilities to its Liberty platform.
The AIM-traded enterprise software group said the purchase would broaden its addressable market, strengthen its offering in the public sector and was expected to be earnings-enhancing in the current financial year on an adjusted earnings per share basis.
It said the acquisition would lift its reach in UK local government from about one-in-three to roughly one-in-two councils, providing significant cross-selling potential and supporting international growth through Jadu's existing customer base and partner network in North America and Australia.
Jadu supplies an accessibility-focused digital experience suite to around 120 organisations and derives about 90% of its 5.9m annual recurring revenue from cloud services.
Netcall said it would pay an initial 15.2m, comprising 11.2m in cash and 4m in shares.
A further earn-out of up to 4m could be payable depending on Jadu's performance, including annual contract value growth of around 20% per year over two years.
The founders of Jadu would remain with the business, which employs more than 80 staff and recently reached EBITDA breakeven in the fourth quarter of its financial year.
James Ormondroyd, chief executive of Netcall, said the deal brings "the digital front-end together with AI-driven workflows in a single solution that helps organisations deliver better services faster.
"The acquisition lifts our UK council coverage to more than half and adds more than 25 US public-sector customers through an established partner channel, creating clear cross-sell routes," he added.
"With 90% of Jadu's annual recurring revenue from cloud services and identified cost efficiencies, we expect the acquisition to be accretive to adjusted EPS this financial year, and to add to our growing base of recurring revenues."
Netcall said the transaction would support its strategy to enhance Liberty's capabilities and consolidate spending with customers by reducing reliance on multiple point solutions.
Admission of the 3,378,664 new shares issued as part of the consideration was expected on 15 December, taking the number of Netcall shares in issue with voting rights to 170,483,752.
At 1439 GMT, shares in Netcall were up 3.26% at 112.55p.
Reporting by Josh White for Sharecast.com.