PCF to acquire Azule08/10/2018
In line with the Company's strategy to grow both organically and by acquisition, PCF Group plc (“PCF”) has announce that its wholly-owned subsidiary, PCF Bank Limited, has agreed to acquire the entire issued share capital of Azule Limited ("Azule") for a total consideration of up to £5.6 million (the "acquisition").
The acquisition offers revenue synergies with the Company's existing asset finance operations, given Azule's focus on a niche class of business-critical assets with strong collateral characteristics and lending to prime credit grade customers. For the year ended 30 June 2018, Azule originated £54.3 million of asset finance, reported revenues of £3.1 million, a profit before tax of £0.8 million and the gross assets were £17.9 million. The acquisition will immediately enhance Group earnings.
The acquisition provides for an initial consideration of c.£4.1 million, of which c.£3.3 million will be settled in cash. The balance of the initial consideration will be satisfied by PCF issuing 1,923,076 new ordinary shares of 5 pence each ("Consideration Shares") at 39 pence per share, representing an aggregate value of approximately £0.8 million, to the Azule management team. The Consideration Shares are subject to a lock-up period of two years, with orderly market conditions attached after this period. An additional earn-out is payable in the form of two deferred cash consideration payments totalling up to £1.5m over a period of two years. The earn-out provisions are dependent on pre-agreed performance criteria. In addition, the directors of Azule have entered into service agreements with the Company for fixed periods of up to 42 months.
The initial cash consideration will be funded by the Company's existing cash and capital resources and the issue of the Consideration Shares is within the authorities granted to the Company at the Annual General Meeting held on 2 March 2018.
The Acquisition is subject to FCA approval for change of control, which is expected shortly. The Company will apply for admission of 1,923,076 Consideration Shares to trading on AIM following FCA approval for change of control. Following admission of the Consideration Shares, the Company's issued share capital will consist of 214,152,601 ordinary shares.
Azule is a UK market leader in providing specialist funding and leasing services to individuals and businesses in the broadcast and media industry. Azule also operates in the audio visual and photography markets and offers its services across Europe as well as in the UK.