By Gertrude Chavez-Dreyfuss
(Reuters) - Canadian technology company HyperBlock Technologies Corp said it reached an agreement to acquire crypto-currency mining firm CryptoGlobal Corp in an all-stock deal valued at C$106 million.
Some market participants said the deal, announced late on Tuesday, is one of the larger acquisitions in the crypto-currency space, which has struggled for further momentum after sharp price gains late last year amid increased scrutiny by government regulators around the world.
"Our aim is to become a comprehensive direct-to-consumer crypto company, offering products and services to the mainstream customer for making and managing their crypto-asset investments," Sean Walsh, chief executive officer at HyperBlock, told Reuters in an interview on Wednesday.
Walsh said HyperBlock recently completed the purchase of one of North America's largest U.S.-based crypto mining and hosting facilities. Combined with the agreement to acquire CryptoGlobal, that puts HyperBlock one step close to its goal of building a diversified crypto company in North America, he said.
CryptoGlobal currently focuses on mining bitcoin, dash, ether and litecoin.
The mining of crypto-currencies is a process in which a global network of computers competes to solve complex algorithms. Those who are able to solve the mathematical problems are rewarded with new bitcoins.
"Combining HyperBlock's large-scale mining-as-a-service model with CryptoGlobal's existing mining, custodial storage, and crypto trading businesses creates a strong foundation for both organic growth and growth through acquisition," Walsh said.
Under the purchase agreement, HyperBlock said in a statement that the deal values CryptoGlobal common shares at 74 Canadian cents each, which represents a 48 percent premium to the closing price of CryptoGlobal's stock on March 29.
HyperBlock said the acquisition is expected to add to its cash flow over the next 12 months.
HyperBlock expects to issue up to approximately 60.4 million common shares to CryptoGlobal shareholders in connection with the purchase. Upon closing of the transaction, CryptoGlobal shareholders will own about 25.2 percent of the combined company.
HyperBlock said it will apply to be listed on the Canadian Securities Exchange upon completion of the acquisition, which is expected to occur at the end of May.
Walsh will be CEO of the new company, with CryptoGlobal co-founders Rob Segal and James Millership and Blockchain Dynamics founder Chris McGarrigle joining him to lead the company, HyperBlock said. Segal will also join HyperBlock's board of directors.