(Alliance News) - Adept4 PLC on Friday said it has signed non-binding heads of terms to acquire cloud technology firm Cloudcoco Ltd in an all-share deal.
The announcement was made in part as a response to the company's share price, with shares up 94% at 2.81 pence in London in morning trade.
IT as a service firm Adept4 anticipates issuing 218.2 million shares, around 49% of Adept4's enlarged capital, for buying Cloudcoco. The deal would not be considered a reverse takeover under AIM rules but would need shareholder approval.
Adept4 expects that the deal will need to be condition on a waiver which would otherwise oblige Cloudcoco to make an offer for Adept4, which will also need to be approved by shareholders.
At present, Adept4 has GBP5 million unsecured loan noted held by the Business Growth Fund PLC. The fund has agreed to sell the loan notes to MXC Capital Ltd, 29.9% Adept4 shareholder, for GBP3.5 million if the Cloudcoco buy goes ahead. This would reduce Adept4's liability.
Adept4 Chair Simon Duckworth said: "We are delighted to have agreed heads of terms to acquire Cloudcoco which has a proven salesforce with an enviable growth track record. Subject to completion of the proposed acquisition, we plan to drive growth from both Adept4's existing customer base and Cloudcoco's own customers and pipeline. Furthermore, the associated proposed reduction in the company's debt would strengthen the group's balance sheet and demonstrate the strong support of our largest shareholder. We see this as a very positive step to return value to shareholders."
Cloudcoco was founded in September 2017 and is trading profitably. A Cloudcoco management team member is due to join the Adept4 board if the deal goes ahead.