Topic: beaconsmind announced two further acquisitions, as anticipated by us, which should fuel growth and profitability going forward. In detail:

beaconsmind acquired 100% of shares of Swissnet ICT GmbH for a total purchase price of CHF 9.7m. The deal is financed by a combination of CHF 3.2m cash, a CHF 1.5m vendor loan as well as 860k shares that have been raised by means of capital increase in kind. Swissnet is an ICT provider based in Berg, Switzerland. The issued shares have a lock-up period of 12 months. The company offers high-speed internet, mobile communications, fixed network, cloud, VoiP and managed IT Services to customers in the DACH region. Here, Swissnet is servicing renowned clients like Tipico or Müller.

In our view, the deal should significantly strengthen beaconmind’s expertise in the SaaS and infrastructure segment. In FY ‘24e, Swissnet is expected to generate revenues of CFH 6.9m and an EBITDA of CHF 1.8m (incl. cost synergies), implying a margin of 26.1%, making the deal both margin and value accretive given a transaction multiple of 5.4x EV/EBITDA ‘24e. The transaction is targeted to be closed in January ’25.

In addition to this, beaconsmind will rebrand as Swissnet Group following the merger in order to reflect the evolution from a former single-product company (beacon technology) to a comprehensive ICT infrastructure and SaaS solution provider.

Moreover, beaconmind announced the acquisition of 100% of shares of UAE based Lokalee for a total purchase price of CHF 11.6m, financed via a CHF 1.2m vendor loan as well as 2.1m new shares issued by ways of capital increase in kind. Lokalee offers AI-based concierge solutions with personalized travel recommendations and single touchpoints for seamless access to in-room services for clients in the hospitality sector.

To finance the cash component of the Swissnet deal, beaconmind will resolve a cash capital increase, commited by management, existing and new investors, to the tune of 850k new shares. Like the capital increases in kind, shares were issued at € 5.80.

Reiterate BUY with an increased € 20.00 PT (old: € 16.00) based on DCF. -continued-