TIDMSWG
RNS Number : 5820V
Shearwater Group PLC
09 April 2019
9 April 2019
SHEARWATER GROUP PLC
Acquisition of cyber security testing business
Shearwater Group plc ("Shearwater", the "Company" or the
"Group", AIM: SWG), the digital resilience group, has entered into
a share purchase agreement to acquire certain business and assets
of Secarma Limited ("Secarma" or the "Business"), a leading
provider of cyber security testing services and solutions (the
"Acquisition").
Highlights:
-- Significantly strengthens the Group's existing cyber security
testing services with world-leading "red teaming" capability
-- Provides for multiple cross selling opportunities across
Group companies
-- In line with stated strategy of building a leading UK-based
digital resilience group
-- Consideration of GBP7.4 million, payable GBP6.7 million in
new ordinary shares and GBP0.7 million in unsecured loan notes
-- Business to be rebranded Pentest
The Business' first-generation cyber security testing services
assess how attackers can exploit and penetrate weaknesses in
operating systems, applications or services. In addition, the
Business provides advance threat analytics and monitoring, and
tailored "red teaming" operations through its highly experienced
cyber security and ethical hacking specialists, which can simulate
an attack on a customers' network environment to test its ability
to withstand an attack.
Alongside this, the Business also offers customers cyber
security consultancy solutions and training, and has its own
proprietary cloud-based Platform-as-a-Service software, which is
licenced to customers on a subscription basis to help integrate
disparate IT Service Management platforms and ticketing
systems.
David Williams, Chairman of Shearwater, said:
"Over the past year we have witnessed a substantial and growing
demand for cyber security testing services and red teaming in
particular. We've looked at a number of opportunities in this
sector and we're delighted to have secured a deal to purchase this
business.
"The incoming team's industry expertise and considerable
experience as well as market position will be very complementary to
our services businesses and provides another key capability for the
Group as a whole."
Background
Established in 2001, the original Pentest business was acquired
by Secarma in 2016. Since this time, it has gone on to build a
substantial customer base of over 250 clients, including a number
of long standing relationships with major multinational companies
in the UK, US and Europe.
The Business' brand will return to Pentest on acquisition and
will form a separate subsidiary company within Shearwater
benefiting from cross selling opportunities across the Group and
access to its established infrastructure.
For the 12 months ended 31 May 2018, the Business generated
unaudited revenue of GBP3.7 million, an unaudited profit before tax
of GBP0.12 million and had gross tangible assets of GBP2.8 million.
The assets subject to the Acquisition include customer contracts,
own proprietary software, certain employees of the Business and
other tangible assets. Stripping out certain costs not being
acquired would have resulted in an unaudited adjusted earnings
before interest, tax, depreciation and amortisation of GBP0.5
million for the Business for the same historic period.
Details of the Acquisition
Under the terms of the Acquisition, the Company will acquire the
shares of a recently incorporated subsidiary of Secarma Limited,
Pentest Newco Limited, which contains the Business.
The total consideration for the Acquisition is GBP7.4 million,
which will be settled through the issuance of 292,292,565 ordinary
shares of the Company at an issue price of 2.3 pence per ordinary
share ("Consideration Shares") to Secarma Limited (the "Seller"),
and an unsecured loan note of GBP0.7 million to be repaid to the
Seller in tranches on the first and third anniversary of completion
of the Acquisition. The unsecured loan note will attract interest
of 6 per cent. per annum. The issue price of the Consideration
Shares represents a premium of 67.3 per cent. to the closing price
of 1.375 pence per ordinary share as at 8 April 2019, being the
last practicable date. The Consideration Shares will represent
approximately 13.3% of the enlarged issued share capital of the
Company.
In addition, the Company has agreed to issue up to a maximum of
196,633,180 additional ordinary shares of the Company on the first
anniversary of completion of the Acquisition subject to the share
price performance of the Company.
Under the terms of the Acquisition, it has been agreed with the
Seller that they will not dispose of the Consideration Shares for a
period of 12 months from issue, with a further 12 month orderly
sale period. Accordingly, application has been made for 292,292,565
Consideration Shares in the Company to be admitted to trading on
AIM ("Admission") and Admission is expected to take place on 15
April 2019. The Consideration Shares will rank pari passu with the
existing ordinary shares in the Company.
Completion of the Acquisition also enables the Company's
existing cyber security testing team to earn revenues for the
Company following a period of inactivity whilst negotiations
regarding, inter alia, the Acquisition were taking place.
Total Voting Rights
In accordance with the provisions of the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority, the Company
confirms that, following Admission, its issued share capital will
comprise 2,196,257,417 ordinary shares of 1p each, none of which
are held in treasury. Accordingly, the total number of voting
rights in the Company will therefore be 2,196,257,417 on
Admission.
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) ("MAR") prior to its release as part
of this announcement and is disclosed in accordance with the
Company's obligations under Article 17 of those Regulations.
Enquiries:
Shearwater Group plc www.theshearwatergroup.co.uk
David Williams c/o Instinctif Partners
Michael (Mo) Stevens
Cenkos Securities plc - NOMAD
and Broker
Max Hartley / Giles Balleny
- NOMAD
Julian Morse / Michael Johnson
- Sales +44 (0) 20 7397 8900
Instinctif Partners shearwater@instinctif.com
Adrian Duffield / Chantal Woolcock +44 (0) 20 7457 2815
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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