Australian cyber safety company Qoria (ASX: QOR) has promptly rejected an unsolicited acquisition proposal from US-based private investment firm K1 Investment Management.
The conditional and non-binding offer is to acquire 100% of Qoria’s issued share capital for $0.40 cash per Qoria share through a scheme of arrangement.
The Indicative Proposal was subject to conditions including satisfactory completion of due diligence and exclusivity over a six-week time frame, unanimous approval from Qoria’s board, and a commitment from all Qoria directors to support the transaction. Final endorsement would still need to come from K1, and the execution of a binding scheme implementation agreement, contingent upon various conditions, such as approval from the Foreign Investment Review Board (FIRB).
K1 advised that it had entered into call option arrangements with two Qoria shareholders over 169 million Qoria shares (approximately 14.4% of Qoria’s outstanding shares). These arrangements can be exercised in the event that a competing proposal is announced.
Qoria, however, has no intentions of engaging with the proposal.
Qoria provides cyber safety services to schools through contracted student licenses. The Company aims to keep students safe online. It also offers parental control service subscriptions to parents directly and through its school networks. Its patented cyber safety ecosystem enables collaboration between schools, parents, and cyber safety educators.
The Qoria Board has concluded that the Indicative Proposal significantly undervalues Qoria and has unanimously rejected the Indicative Proposal as not being in the best interests of shareholders.
The Qoria Board believes the Indicative Proposal does not reflect its position in the child safety and wellbeing space in enterprise and consumer markets. It ignores Qoria’s strong growth prospects in a highly supportive regulatory environment, its scale, and its ability to accelerate through its integrated platform.
Moreover, the Company feels that it is “opportunistically timed”, given that it is at the cash profit inflection point and in the midst of its most productive annual sales quarter. Its share price has increased by almost 66% over the past year.
In H1 FY24, Qoria’s revenue surged 31% to $48.5 million. Its loss improved by 16% to $32.7 million. The Company entered positive cash flow reaching $900k from H1 FY22’s cash burn of $6.8 million. The US was its top-performing segment, recording a revenue of $19 million, followed by the UK, Australia and New Zealand.
K1 has been building its Australian portfolio over the years, acquiring Elmo Software and the automated CX platform Cyara. As per the AFR, this acquisition bid has been in the making over the past few days, with Morgan Stanley trying to garner the support of Qoria shareholders.
The Board does not intend to engage with K1 regarding the Indicative Proposal, and Qoria shareholders do not need to take any action regarding it. There is no certainty that a further proposal will be received (from K1 or any other third party), and shareholders are cautioned not to place undue reliance upon such a proposal emerging.
Alinda is a Business Reporter for The Sentiment
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