Intelligent Monitoring Group Limited subsidiary ADT has entered into separate binding sale and purchase agreements to acquire all of the shares in Everjazz Pty Limited, trading as Alarm Assets Group (or AAG), and ACG Integration Pty Ltd from two separate private vendors. IMG will pay AUD15.9 million in cash for the two businesses, subject to customary adjustments for working capital, cash, and debt on completion.
Alarm Assets Group is a Western Australia-based security services provider, while ACG is a national security services provider. IMG says the Australian security industry remains highly fragmented, with no clear market leader. IMG says given the industry’s stable revenue streams and fixed infrastructure cost model, it remains conducive to selective consolidation at attractive returns.
IMG will fund the acquisitions through the placement of approximately 60.4 million new shares at AUD0.32 each to raise circa AUD19.3 million, which is expected to be highly EPS accretive. IMG says the investments will position it well for a potential refinancing of existing debt and associated reduction in interest costs in 2025.
“These acquisitions are highly beneficial and timely additions to the ADT business in Australia,” said Managing Director Dennis Hambling. “Having already lifted ADT’s commercial business from AUD2m revenue in the year before IMG’s acquisition of ADT to a run rate of AUD12m per annum by the end of June 2024, the addition of these quality businesses, customers, and people will help unlock ADT’s commercial business further as it seeks to return to its historical levels of AUD125m revenue and beyond.”
The AUD0.32 shares issued under the placement represent a 7.2% discount to the last closing price of AUD0.345 per share on May 23, 2024, and a 0.4% discount to the 10-day volume weighted average price of AUD0.322 per share up to and including May 23, 2024.
“IMG is very thankful to its existing investors for their ongoing support in building what we envisage being the best security services business offering in Australasia,” added Hambling. “Following today’s placement, IMG also warmly welcomes several new institutional investors onto the register.”
Completion of each purchase is conditional upon IMG receiving formal approval from its financiers, as well as certain other customary conditions in ADT’s favour. Subject to satisfaction of these conditions, IMG expects to close the deals before June 30, 2024.
