GBG to buy IDscan Biometrics and raise £25m in share placing

GBG, an identity intelligence specialist, agreed conditionally to buy IDscan Biometrics, an identification software provider, and raise up to £25m through a share placing on AIM.

The deal consists of £37m cash on completion, with a maximum of £8m further if IDscan Biometrics reaches revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) targets between 12 and 18 months from completion of the acquisition.

The acquisition is to be funded through a share placing, which aims to raise up to £25m, and through borrowings under its existing back facilities. The placing is expected to be earnings accretive in the first 12 months of the acquisition.

GBG will place over 9m new ordinary shares of 2.5p each at a price of 275p per share. This represents about 7.3% of the company’s existing issued share capital.

The placing was accelerated through a bookbuild process which was launched immediately and Peel Hunt is acting as the placing’s bookrunner.

GBG's acquisition of IDscan Biometrics will provide access to a large global credit, fraud, risk and compliance market, which $19bn are spent on each year. It will also enhance the company’s fraud solutions capability and offer new cross selling opportunities.

IDscan Biometrics' revenues were up 138% to £7.6m, delivering a gross profit of £6.1m, up 135% and an adjusted operating profit of £3.2m, for the year ended 31 July 2015.

The balance sheet for IDscanBiometrics had £1.6m in cash and net assets of £1.2m.

GBG chief executive Richard Law said: “GBG has followed IDscan Biometrics over the years and we have seen this business grow strongly, winning significant enterprise customers.

“IDscan Biometrics has a very strong team, has great products and is a great strategic and cultural fit for GBG. I am very pleased to welcome IDscan Biometrics into the GBG family of companies and myself and the board are confident of continued success for GBG and IDscan Biometrics.”

Shares in GB were up 4.51% to 301p at 1033 BST.