Asia Vets proposes acquisition of fintech firm that will result in reverse takeover

SINGAPORE (THE BUSINESS TIMES) - Catalist-listed Asia Vets Holdings has entered into a sale and purchase agreement to acquire 100 per cent of the ordinary shares in Aldigi Holdings, a fintech company, that will result in a reverse takeover.

In a bourse filing on Thursday (Dec 30), the company said that the proposed acquisition will let the group capture opportunities within the "fast-growing financial and technology business", in line with its plan to enhance revenue by venturing into a high-growth sector.

With the additional revenue stream and diversified portfolio of businesses in addition to its current veterinary care business, the company said that the acquisition could increase its market capitalisation and widen its investor base.

It also noted that Aldigi's distributed ledger technology platforms and digital asset solutions have been deployed at a Monetary Authority of Singapore licensed digital asset exchange.

As part of the proposed acquisition, Asia Vets will pay $45 million by issuing 335,436,357 new ordinary shares at $0.13415 per share for Aldigi's shares.

The value was arrived at based on the forecasted profit after tax of RHT DigiCapital, Aldigi's largest forecasted profit contributor for the next three financial years. The company then considered an earnings multiple of 17.2, the median of comparable transactions, and a 20 per cent discount due to the lack of marketability and derived an enterprise value of $73 million for 100 per cent of Aldigi.

Since RHT DigiCapital is a 60 per cent subsidiary of Aldigi, the enterprise value of 60 per cent of Aldigi would be approximately $44 million.

Asia Vets said that none of the shareholders and directors of the deal's vendor, RHT Aldigi Financial Holdings, is related to its directors, controlling shareholders or respective associates. The consideration was also based on arm's length negotiations between both parties on a willing-buyer, willing-seller basis.

Furthermore, an independent valuation report on Aldigi will be conducted. If the report differs from the enterprise value by more than 5 per cent, both parties will renegotiate the terms in good faith.

Aldigi may also take on a pre-completion fundraising exercise by issuing convertible bonds or securities to selected investors up to a maximum amount of $2 million at a price higher than the issue price.

The completion of the proposed acquisition is subject to the fulfilment of numerous customary conditions, such as approval by shareholders at an extraordinary general meeting that is to be convened, as well as the completion of a share consolidation exercise such that the price per share of the consideration share shall be equal to or greater than $0.20 in compliance with Catalist Rules.

Asia Vets shares last traded at five cents on Dec 29, before a trading halt was requested on Dec 30, pending the release of an announcement.

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