Wellington Drive lines up first acquisition with option to buy iProximity for A$4.3m
By Sophie Boot
Feb. 28 (BusinessDesk) - Wellington Drive Technologies, which makes energy efficient motors for commercial refrigerators, has taken an option to buy Australian digital marketing company iProximity for A$4.25 million.
Wellington Drive and iProximity had an existing partnership, and have now signed a sale and purchase option agreement which runs until August, allowing Wellington Drive to buy iProximity for a combination of A$1.25 million in up-front payments and three-year cash and share-based earn-out targets. The payments would be up to A$500,000 for 2018 and 2019, based on earnings before interest and tax targets, and the company could issue up to A$2.5 million in consideration shares to the vendor.
The impact for the 2018 financial year is expected to be minimal, but the existing relationship is "is already benefiting Wellington’s IoT revenue", it said.
Last year, Wellington Drive reported that it had widened its loss in the third quarter and downgraded its 2017 earnings guidance on slower customer demand, though maintained its forecast for its first net profit in the 2018 financial year. Its 2017 earnings are due out today.
iProximity's founders David Burden and Rohan Lean will join Wellington Drive via the acquisition, with Burden as the company's head of internet of things (IoT) and marketing solutions, and Lean as lead architect for those solutions, the company said.
"This acquisition will significantly broaden the digital offering for our food and beverage brand customers and unlock a wide range of new market opportunities for the business," chief executive Greg Allen said. "Our partnership will focus on developing and selling Wellington’s Smarter Coolers platform – this includes the SCS Connect System, data and reporting services and adds iProximity’s powerful contextual marketing technology."
Wellington Drive said that as part of the acquisition, it will look to expand iProximity's Smart Cities business, which uses an IoT platform to allow city councils to give locals and visitors proximity-based information through their city's apps, with programmes such as 'Smart Bikes’, ‘Smart Facilities’ and ‘Smart Signs’.
The shares last traded at 17 cents, down 26 percent in the past 12 months