appScatter Group PLC Acquisition of Priori Data GmbH and Fundraise (5327S)

TIDMAPPS

RNS Number : 5327S

appScatter Group PLC

26 June 2018

26 June 2018

appScatter Group plc

("appScatter" or the "Company")

Acquisition of Priori Data GmbH and Associated Fundraise

appScatter Group plc (AIM: APPS), the scalable business-to-business ('B2B') Software as a Service ('SaaS') platform that allows users to distribute and manage their apps on multiple app stores around the world, is delighted to announce that it has agreed revised terms for the acquisition of Priori Data GmbH ("Priori").

Following the lapsing of a previous acquisition agreement between the parties, as announced on 18 June 2018, and under the terms of a revised conditional sale and purchase agreement ("the Acquisition Agreement"), appScatter Group plc will acquire 100 per cent. of the share capital of Priori for a total consideration payable on completion of GBP13.5 million (the "Acquisition"), of which approximately GBP1.8 million will now be payable in cash (the "Cash Consideration") and GBP11.7 million will be satisfied by the issue of a total of 16,667,157 new ordinary shares in the Company (the "Consideration Shares") at an effective issue price of 70 pence per ordinary share ("Ordinary Shares"). 16,290,325 of the Consideration Shares will be issued on Completion of the Acquisition and 376,832 of the Consideration Shares (representing EUR300,000 in issue value) will be deferred until the determination of the completion accounts and the net assets statement in connection with the Acquisition which will be due forty five days after completion (the "Deferred Shares"). Further details of the Acquisition Agreement are set out below.

Completion of the Acquisition is conditional on, inter alia, the passing of the resolutions at the Company's upcoming Annual General Meeting on 29 June 2018 (the "AGM"), following which the Acquisition is expected to complete using the share issuance authorities sought at the AGM to enable the issue of the Consideration Shares and the Fund Raise Shares (as defined below).

The Company is also pleased to announce that it has completed a further conditional fundraising (the "Fund Raise") by way of subscriptions to raise gross proceeds of approximately GBP1.6 million through the issue of a total of 2,318,643 new Ordinary Shares (the Fund Raise Shares") at an issue price of 70 pence per new Ordinary Share. The net proceeds of the Fund Raise of approximately GBP1.5 million will be applied towards satisfying the Acquisition Cash Consideration.

In addition, the Company is also pleased to confirm receipt of the long-awaited UK tax clearances, which have in part delayed the completion of the Acquisition. Accordingly, and subject to additional demand from investors relying on such tax clearances, the Company has made arrangements for a general private placing of the Company's Ordinary Shares, at a price of 70 pence per Ordinary Share, to be made available to those qualifying investors relying on such tax clearances prior to completion of the Acquisition.

Commenting on the acquisition of Priori, Phillip Marcella, Chief Executive of appScatter Group plc, said:

"I am delighted to have reached revised terms for the acquisition by appScatter of Priori. I strongly believe that the combination of the appScatter platform and the data held by Priori will significantly advance the Company's development and positioning. We are already collaborating with Priori on several new high profile clients - with growing interest in the abilities of the enlarged group from key potential enterprise customers. "

Benefits of the Acquisition

The board of appScatter (the "Board") believes that the Acquisition will significantly enhance the prospects of the enlarged group and will allow the enlarged group to provide significantly enhanced, market leading, data-led app insights. The Board believes that these insights, when combined with Priori's data intelligence software, will enhance the appScatter group's ability to meet the increasing data demands of existing and prospective customers.

Combining the businesses will create a source of data intelligence drawing on 299 billion downloads across 5million apps in 55 categories; as well as 6 billion devices in 52 territories with appScatter data set the combined business intelligence will support an additional 25 app stores across 175 territories.

About Priori

Founded in 2013, Priori is a B2B SaaS platform provider of mobile app intelligence based in Berlin, Germany with proprietary core data intelligence software and 16 full time employees with experience in monetising app market data, including data scientists, engineers and sales.

Priori's data is sourced from more than six billion unique user devices in 252 territories and Priori's proprietary core machine learning data intelligence software provides intelligence across keywords, apps, markets, usage and audience. Priori's active customers include blue-chip multinational organisations.

Based on unaudited management information, in the financial year ended 31 December 2017, Priori had revenues of EUR1,056,000 (on a cash-receipt basis) and recorded EBITDA losses of EUR410,000 (on a net cash-receipts/cash-expense basis). On completion of the proposed Acquisition, following the conversion of existing Priori loan notes, Priori is expected to have unaudited estimated net assets of approximately EUR39,000.

Authority to issue shares

The Board will use the authorities proposed under resolutions 8(c) and 9 at the forthcoming AGM on 29 June 2018 at 10.00 a.m. at the offices of FTI Consulting, 200 Aldersgate Street, London EC1A 4HD to complete the Acquisition. If the necessary resolutions are not passed at the AGM, the Company will be unable to issue the Consideration Shares and the Fund Raise Shares and the Acquisition will therefore not proceed.

Total Voting Rights

On completion of the Acquisition, and following the issue of Consideration Shares (including the Deferred Shares) and the Fund Raise Shares (together the "New Ordinary Shares"), the Company will have 86,556,261 Ordinary Shares in issue. No Ordinary Shares are held in treasury. Application will be made to the London Stock Exchange for the New Ordinary Shares, which will rank pari passu with the Company's existing Ordinary shares on issue, to be admitted to trading on AIM.

The Acquisition Agreement

Pursuant to a conditional acquisition agreement dated 26 June 2018 (the "Acquisition Agreement") between (1) the Company and (2) Quixote Holdings UG, Lakestar I LP, Martin Rajcan, Priori Trust UG, Seedcamp III LP and Calceus GmbH (together the "Sellers"), the Company has agreed to acquire all the issued and to be issued shares in Priori. The consideration under the Acquisition Agreement is GBP13.5 million to be satisfied on completion through the payment of the Cash Consideration and the issue of the Consideration Shares.

Completion of the Acquisition is conditional on the passing, at the AGM, of the resolutions which will be relied upon to issue the Consideration Shares.

The parties have agreed a long stop date for completion of the Acquisition of 3 July 2018.

Under the terms of the Acquisition Agreement, the Sellers have agreed to indemnify the Company for:

(i) all claims, liabilities, costs and reasonable expenses arising in connection with any legal dispute regarding the usage of certain images on Priori's website in the past;

(ii) all claims, liabilities, costs and reasonable expenses arising in connection from any violations of the laws with respect to (i) bogus self-employment and (ii) minimum wage laws by Priori (in each case, including but not limited to social security contributions, taxes, fines and penalties and external costs with respect to such matters);

(iii) all claims, liabilities, costs and reasonable expenses arising in connection from any violations of the Protection Against Unfair Dismissal Act by Priori in respect of its employees;

(iv) all claims, liabilities, costs and reasonable expenses arising in connection with any convertible loan agreements made between the Priori and certain lenders in 2013 and 2016; and

(v) all claims, liabilities, costs and reasonable expenses arising in connection with any claim made by any employee of Priori (whether current or former) or other person with respect to the intellectual property rights or with respect Priori's proprietary software.

Each of the Sellers are giving warranties in favour of the Company as to title only. The management Sellers are giving a suite of warranties in favour of the Company that are usual for this type of transaction.

The aggregate liability of the Sellers for claims in respect of title shall not exceed an amount equal to the Consideration and all other claims, indemnity claims and all claims under the tax covenant given by the Sellers shall not exceed an amount equal to twenty-five per cent. (25%) of the Consideration. For the avoidance of doubt, the aggregate liability of the Sellers in respect for any and all claims shall under no circumstances exceed the Consideration.

The management Sellers have agreed not to carry on or be engaged, concerned or interested (whether directly or indirectly) with the business of any other app analytics platform for a period of 2 years following completion

of the   Acquisition. 

The Acquisition is conditional, inter alia, upon the approval of appScatter shareholders of the necessary resolutions at the AGM. If the necessary resolutions are not passed at the AGM, the Acquisition will not proceed.

Lock-in and Orderly Market Arrangements

20.73 per cent. of the Consideration Shares, which will be issued to Priori management, will be subject to a lock-in agreement for an initial period of 12 months and an orderly market arrangement for a further period of 12 months following the expiry of the initial lock-in period. Consideration Shares to be issued to Lake Star, a venture capital investor in Priori, representing 27.29 per cent of the Consideration Shares will be subject to an 18 month orderly market arrangement. The remaining 51.98 per cent. of the Consideration Shares to be issued to the other shareholders of Priori, representing early angel investors shall be subject to a lock-in agreement for an initial period of 6 months and an orderly market arrangement for a further period of 12 months following the expiry of the initial lock-in period.

For enquiries, please contact:

 
appScatter Group plc                         Tel: [phone] 
 Philip Marcella, Chief Executive Officer     www.appscatter.com 
 Manish Kotecha, Finance Director 
FTI Consulting                               Tel: [phone] 
 Financial Public Relations                   [e-mail] 
 Matt Dixon / Adam Davidson / Niamh Fogarty 
 
 
Smith & Williamson Corporate Finance Limited  Tel: [phone] 
 Nominated Adviser and Joint Broker            www.smithandwilliamson.com 
 Azhic Basirov / Ben Jeynes / David Jones 
 Stifel 
 Joint Broker 
 Fred Walsh / Neil Shah / Ben Maddison         Tel: [phone] 
                                               www.stifel.com 
 

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

About appScatter Group plc

appScatter is a scalable B2B SaaS platform that allows paying users to distribute their apps to, and manage their apps on, multiple app stores. Additionally, the centralised platform enables app developers and publishers to manage and track performance of their own and competing apps across all of the app stores on the platform.

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June 26, 2018 02:00 ET (06:00 GMT)