Safe-T Group Ltd (NASDAQ: SFET) rose in Wednesday trading after the company announced plans to acquire a business proxy network solution provider, NetNut, for $9.7 million in cash and stock.
The Israeli-based Safe-T, a provider of software-defined access solutions for the hybrid cloud, will purchase the entire share capital of NetNut from its shareholders, and the assets required for NetNut's ongoing operations from its parent corporation, in consideration of $9.7 million, which will be paid in a combination of about 40% equity and 60% cash.
The consideration may include an additional earn-out payment in 2020, subject to the level of increase of NetNut's revenues during 2019 compared to 2018. The closing of the transaction is subject to Safe-T's shareholders' approval and other closing conditions which are customary to such transactions. Further details of the agreement will be provided in a notice to shareholders, convening a shareholders meeting for approval of this transaction.
According to unaudited financial information provided to Safe-T, NetNut has shown significant growth in revenues from $0.8 million in 2017 (unaudited) to $2.2 million (unaudited) in 2018, has no debts or long-term liabilities, and comes with efficient operational expenses management.
Safe-T also announced it has entered into definitive agreements with two U.S. institutional investors for an aggregate $6 million convertible loan which, primarily will be used by Safe-T to finance the cash portion of NetNut acquisition. The loan is for a term of 18 months, will bear interest at 8% per annum
Shares in SFET opened Wednesday up 33 cents, or 12.4%, to $2.95.
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