Ann: Enters Term Sheet to Acquire AdCel and Capital Raising, page-17

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HairyRichard

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03/05/18

13:31

Post #: 32859232
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Originally posted by Glenn_Archer ↑

For Engage, its is all about creating the 'network effect' ... so I really like the additional integrations & also AdCel's 'creme de la creme' (to paraphrase the announcement) clients. So ticks the box for growth of the network both from an inventory & buyer point of view. Integration growth also adds to the stickiness of the network due to the time / energy taken. A mild annoyance is that in previous releases, M&A was promised to be earnings accretive. I took that to be buying companies that have earnings. AdCel is described as being close to break-even; hence relying on synergies of the deal & the revenue multiplier effect to be earnings positive. But i can live with it. I am also pleased that a SPP will be offered at the same terms as the raise - 16c & up to $2m. The Ukrainian development facility is an interesting aspect of this deal - could lead to savings in future R&D costs too. End game is they are now forecasting $30m in sales on an annualised basis & the network has grown. So I'll take the short-term pain. But one thing I know about SPP is that the share price trades down to the offer price. Also, might be a few staggers on the insto side.

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Great post Glenn. Just wanted to point out that everywhere that I read they said that they would acquire cashflow positive or close to it companies. This acquisition was pretty much in line with what o expected however there is a fair bit of extra dilution I didn't expect. I'll either take part of the SPP or put an order in at 16c or even both. I think we could possibly see profits upwards of $5m this CY provided we don't spend more on acquisitions (Which I'd be more than happy with)

Last edited by HairyRichard: 03/05/18

EN1 Price at posting: 16.8¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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