Ann: Aconex announces acquisition and capital raising, page-2

For discussion:

ACX very rough market capitalisation to revenue ratio = 7 ($830mil / $120mil)

$96mil acquisition of Conject costs to bolt on an additional $36mil revenue.

Classic revenue arbitrage if the market cap / revenue ratio is maintained.

New revenue = $156mil ($120mil + $36mil).

Implied market cap if market cap / revenue ratio is maintained = $1.1bil ($156mil x 7).

Implied growth in market capitalisation = $1.1bil (new market cap) - $830mil (current market cap) - $96mil (acquisition costs) = +$174mil (net growth)

Implied share price appreciation from acquisition = $174mil / $830mil = 21%

Implied share price increase = $1.13 ($5.37 x 21%)

Target share price post-acquisition = $6.50 ($5.37 + $1.13)