Israeli company MTI Wireless Edge Ltd. (AIM: MWE) has agreed to buy a 50% stake in Parkland Australia for A$800,000 (NIS 2 million).
A$600,000 of the proceeds will be paid within 30 days of the completion of the deal, and the balance in two payments in July 2020 and July 2021, based on Parkland's financial results in the years ending in June 2020 and June 2021.
The acquired company is the Australian distributor of MTI subsidiary Mottech Water Solutions, which devises water control solutions and will be making the actual acquisition. The seller in the deal is New Zealand company Parkland Products. The agreement stipulates that both the buyer and the seller in the deal are to be given options to purchase each other's stock, subject to certain conditions.
Parkland Australia makes a profit
MTI provides wireless communications solutions, antennas, and security systems. Its market cap is £20 million (NIS 92 million). MTI's report to the stock exchange says that the Australian company made a $160,000 pre-tax net profit on $1.5 million in revenue in the year ending in June 2018. The company had $270,000 in net cash at the end of that year. MTI believes that the acquisition will bolster its potential revenue and profit and create a platform for increasing its repeat revenue from services and maintenance for water control systems.
Mottech CEO David Shani said, "We are satisfied with the acquisition, which will contribute immediately to the company's results and enable Mottech to climb a step higher in the value chain in the Australian market and provide solutions and services for the wireless control sector."
MTI, headed by chairperson Zvi Borovitz and CEO Moshe Borovitz, last year completed a merger with its subsidiary, MTI Computers, which was listed on the Tel Aviv Stock Exchange (TASE) and was delisted following the merger. In the merger, all of the shares in the subsidiary held by the parent company were transferred pro rata to the shareholders in the parent company and added to their holdings in the company. The company said that the merger had concrete advantages for it and for the shareholders, and was increasing its savings on costs.
Published by Globes, Israel business news - en.globes.co.il - on June 24, 2019
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