Mobi724 Global Solutions Inc. (TSXV: MOS) ("Mobi724" or the "Company"), a fintech enabler of real-time, AI-powered payment card-linked solutions, is pleased to announce it has entered into an agreement in principle (the "Agreement") with Avenida Inc. (the "Seller") to acquire all of the shares of Avenida Compras S.A. ("Avenida+"), a rapidly growing white-label marketplace and e-commerce business with a growing presence in Latin America (the "Transaction").
The purchase price payable by Mobi724 for Avenida+ will consist of an upfront payment of US$4.0 million, of which US$3.5 million will be paid in cash and US$0.5 million will be paid through the issuance of shares at their market price at the time of closing, subject to a minimum issue price of $0.05 per share as per the requirements of the TSX Venture Exchange ("TSX-V"), as well as potential additional payments of up to a further US$6.0 million, payable in cash and shares, based on Avenida+'s financial performance during the period ending December 31, 2023 (the "Earn-out Payment").
The maximum Earn-out Payment of US$6.0 million would be comprised of US$5,350,000 in cash and US$650,000 in shares to be issued at their market price on the date of payment, again subject to a minimum issue price of $0.05 per share. It is contemplated that the shares so issued would be issued directly to the Seller's shareholders in proportion to their equity holdings in the Seller, all of whom act at arm's length to the Company.
The Transaction is expected to close on or about May 15, 2022, and is subject to regulatory approval by the TSX-V, the Company securing the necessary financing, the execution of definitive documentation as well as certain conditions and closing adjustments which are customary for transactions of this nature. No finder's fee will be paid by the Company in relation to the Transaction.
Avenida+ has relationships with a number of banks with a current card base of approximately 24 million payment cards. Avenida+'s management will continue to be spearheaded by its current CEO and CFO, Daniel Jejcic and Mayra Fiszman respectively. Daniel and Mayra's leadership skills and entrepreneurial spirit have helped Avenida+ build white label e-commerce marketplaces that offer more than 100,000 products from over 4,500 merchants.
For the 12-month period ended June 30, 2021, Avenida+'s audited financials* are as follows:
Cash
$ 0.9 million
Total Assets
$ 3.0 million
Total Liabilities
$ 0.6 million
Revenue
$ 2.5 million
Net Loss
$1.7 million
EBITDA
$0.8 million
*expressed in Canadian Dollars using an exchange rate from ARS to CAD of 0.013 as of June 30, 2021
"We are truly pleased to make this transformational acquisition that further positions Mobi724 as a leading aggregator of real-time offers and rewards both online and offline in the Latin America region," said Marcel Vienneau, CEO of Mobi724. "We formed a strategic alliance with Avenida+ in November 2020, and in working together, we both experienced significant revenue-generating opportunities and an expanded sales pipeline. Avenida+'s management team has achieved strong success at growing its business, and as part of Mobi724, we look forward to working together to generate even further growth."
Avenida+'s hub is based in Buenos Aires, Argentina, and currently serves B2B clients across Latin America, including banks. Avenida+'s white-label marketplace platform allows payment card issuers, loyalty program operators, shopping mall associations, and other third parties to provide their customers with an infinite variety of online products and offers from local merchant networks or leading global brands. Avenida+'s marketplace is integrated into several payment networks, allowing for a rapid scaling-up across Latin America and is available either as a SAAS or as an E2E (end-to-end) model, including customer service, onboarding of merchants and logistics.
Marcel Vienneau added: "We will leverage Avenida+'s existing relationships with over 4,500 merchants and with banks having a current card base of approximately 24 million payment cards so as to enable us to monetize our AI-powered portfolio of solutions, such as cash back and pay with points. As a team, we aim to offer the most innovative portfolio of solutions to our Latam target market of approximately 1 billion payment cards."
"The demonstrated success of our partnership with Mobi724 was the motivating factor for us to take the next exciting step of joining forces so that together we can capture a larger share of the fast-growing Latin American market for payments and online marketplaces," added Daniel Jejcic, CEO of Avenida+. "The complementary nature of our businesses will enable 360° solutions for existing and future clients and create tangible value for cardholders."
In fiscal year 2023, Mobi724 expects to be EBITDA positive and to generate consolidated revenues of between $18M to $24M.
The Earn-out Payment under the Transaction will be tied to a US$12.5 million revenue target for Avenida+ in 2023. The overall acquisition price equates to a multiple of approximately 0.7x to 1x on Avenida+'s 2023 revenue target. The Company anticipates that the Transaction will be funded through a combination of debt, convertible debt and the issuance of shares and expects its basic/fully diluted share count to increase by between 15% to 20%.