LONDON (Alliance News) - Boku Inc said Thursday it has acquired US mobile identity and authentication system provider Danal Inc for up to USD94 million in cash and paper.
Shares in Boku were down 19% in late-morning trading in London at 79.50 pence each.
The initial consideration for the acquisition will be about USD30 million. This will consist of 26.7 million Boku shares, for which the company gave no issue price but based on the price of Boku shares following Thursday's decline would be worth GBP20.5 million, about USD26 million.
The initial consideration also consists of USD3 million of Boku warrants, exercisable for five years at 141 pence each, and USD1 million in cash, payable on completion.
Boku also will pay up to USD64 million - consisting of USD62 million in shares and USD2 million warrants - in deferred consideration depending on Danal's future performance.
No deferred consideration will be payable if Danal's revenue for 2019 is below USD10 million.
In 2017, Danal generated revenue of USD5.1 million, with a loss before interest, tax, depreciation and amortisation of USD5.2 million. The US firm had net liabilities of USD10.3 million at December 2017.
Boku said the Danal acquisition will "accelerate the development of Boku's mobile identity service offering, allow expansion into new merchant segments, such as finance and government and ensure broader exposure to key geographies, including the USA."
Danal will merge with Boku's wholly-owned US-incorporated subsidiary.
"This acquisition allows us to offer services that go further and to improve user quality for our customers while at the same time improving the mobile experience for users. Mobile commerce is booming, yet many tools were developed to support PC-based commerce," said Boku Chief Executive Officer Jon Prideaux.
"Danal has shown that mobile network operator data can also combat fraud, reduce friction in signup and ensure regulatory compliance on mobile. These problems are relevant not just to our existing digital customers but also in other sectors including e-commerce, finance, transportation and government."
Boku expects the acquisition to be earnings dilutive in 2019 as the company intends to invest in Danal. Earnings are expected to improve through 2020 and be accretive thereafter.
CEO Prideaux continued: "Combining Danal's customer base and technology with Boku's international scale and global mobile network operator connection capability, will allow us to build the world leader in this emerging space.
"We look forward to the completion of the acquisition and integrating Danal into our leading carrier billing offering. Truly we are entering the era of carrier commerce."
Boku said, unrelated to the acquisition, its total payment volume in the 10 months to October more than doubled to USD2.8 billion from USD1.3 billion in the same period last year.
The company's monthly active users in October increased 83% from last year to 12.2 million. Boku said its account connections now total 155.
Separately, Boku said NewView Capital Fund I LP now holds a 6.1% interest in the company. NewView's prior holding was not disclosed.
Boku (BOKU)