Here’s why the Spirit (ASX: ST1) share price is up 5% this morning

The Spirit (ASX: ST1) share price his soaring today after news the telecom company has acquired software company Nextgen.
The post Here’s why the Spirit (ASX: ST1) share price is up 5% this morning appeared first on The Motley Fool Australia. –

unstoppable asx share price represented by man in superman cape pointing skyward

The Spirit Technology Solutions Ltd (ASX: ST1) share price is up this morning, after news of the company’s biggest acquisition to date. The telecom company has acquired software company Nextgen, saying it expected the acquisition to generate $36 million of revenue.

At the time of writing, the Spirit share price is up 5.7%, trading at 37 cents. 

Let’s look closer at Spirit’s new acquisition.

Acquisition of Nextgen

Spirit ended a two-day trading halt this morning with news of its latest acquisition.

According to the company’s release, its purchase of Nextgen has doubled its business to business (B2B) customer base and brought 100 new salespeople to Spirit. Those salespeople will continue to sell Nextgen products while cross-selling Spirit’s internet, cloud, voice, mobiles and cybersecurity products.

To purchase the B2B software company, Spirit conducted a $23.8 million placement to institutional and sophisticated investors. It also lifted its debt facility with the Commonwealth Bank of Australia (ASX: CBA) from $15 million to $25 million.

The acquisition’s total cost is capped at $50 million, with $10 million of that to be deferred. 

All vendors are to remain with Spirit for at least 18 months (on a performance-based earnout) and will take 30% of the consideration in Spirit shares and 70% in cash. The cash component will be funded from the capital raising and CBA debt facility.

According to Spirit’s announcement, Nexgen expects to record $7.2 million to $7.6 million of EBITDA through the 2021 financial year.

The acquisition news comes nearly a fortnight after Spirit announced it would shift its focus to its business market, divesting its consumer infrastructure assets.

Spirt share price snapshot

Today’s news may be the boost the Spirit share price needs to dig out of its 2021 ASX slump. It has dropped by 7.5% year to date. However, the Spirit share price is still up by 164.29% over the last 12 months.

Spirt has a market capitalisation of around $191 million, with approximately 547 million shares outstanding.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of SPIRIT TC FPO. The Motley Fool Australia has recommended SPIRIT TC FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Here’s why the Spirit (ASX: ST1) share price is up 5% this morning appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!