Crealogix Holding AG (SIX:CLXN) is acquiring Innofis, a Barcelona-based digital banking competitor, for an undisclosed price, to expand its core digital banking business into the lucrative Middle Eastern markets. Noting that Innofis is fast growing and highly profitable, we would expect the value of the deal to be priced above the average of comparable transactions. As well as expanding the group’s geographical coverage the acquisition broadens its product offering and creates an opportunity to grow the employee base in a significantly lower-cost market. We estimate that the deal will boost the group’s operating margins by 200bp, but the level of value creation is dependent on the deal cost, and we are retaining our forecasts until more information is available.
Acquisition of Innofis
The acquisition fits with the group’s strategy to target new markets and acquire customers and add product offerings. Innofis generates more than CHF10m of revenues and is highly profitable. CREALOGIX says the purchase will be mainly settled in CREALOGIX shares. David Moreno, the CEO and founder of Innofis, is selling his entire 98% shareholding and will hold more than 10% of the enlarged share capital; this suggests he would hold at least 145k CREALOGIX shares worth at least CHF25.4m at current market prices. Mr Moreno is staying with the company and will head its Middle Eastern operations.
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