3D printing company Robo 3D (ASX:RBO) has released a troika of positive news, announcing the acquisition of the world’s largest library of Science, Technology, Engineering and Maths (STEM) project kits for US Schools, the completion of a A$3.25 million capital raising and appointing highly experienced executive Tony Grist as Chairman.
MyStemKits, which was established in 2003, has grown into one of the US’s leading STEM education companies, offering school curriculums via an online lesson planner, which is sold on an annual licensing fee.
The lessons incorporate 3D printed kits, such as miniature windfarms, which are well aligned with Robo 3D’s existing desktop 3D printing business.
The acquisition makes a significant addition to the company’s existing education portfolio.
In calendar year 2017, MyStemKits generated unaudited revenue of US$2.0 (A$2.66 million) and EBITDA of US$0.8 million (A$1.08 million) on an adjusted, pro forma basis.
Robo 3D is upbeat on its ability to generate further efficiencies, identifying approximately US$1 million in cost reductions.
Total consideration for the acquisition of project kit manufacturing and ed-tech business MyStemKits is US$2.0 million (A$2.63 million), payable as 60% cash and 40% deferred equity representing 1.0x revenue multiple and 2.4x EBIT multiple.
A 5% royalty will also apply on all MyStemKits license revenue generated for a five-year period following the acquisition.
Robo 3D believes the acquisition will he earnings accretive in FY19.
The addition of Tony Grist as Chairman is expected to provide investors with further incentive to participate in the raising.
Grist is the co-founder and former CEO of Amcom Telecommunications. Which he led though a merger with Vocus Communications to create a A$5.0bn Trans-Tasman fibre-optic carrier giant.
Robo managing director Ryan Legudi said: “Tony has been a shareholder of Robo 3D and we are now delighted to have him want to join our board to see the Company through this transformative acquisition.
Tony is widely recognised as an industry leader and has successfully driven large-scale M&A strategies that have delivered significant shareholder value. His skills are aligned with our current growth strategy and with his vast capital markets experience, we expect him to make an immediate impact to our Company”.
Commenting on Robo and its proposed acquisition, Mr Grist added: “Sales for the core printer business in FY2018 are substantially more than FY2017 so there is strong momentum there. But what really attracts me to this transaction are the high margins and recurring SaaS model of the complementary MSK business, along with Federal and State funding initiatives driving STEM curriculum sales.
“I’m looking forward to seeing where we can take it as a bundle, and I wouldn’t rule out more accretive acquisitions in the education content software sector in the US.”
To fund the acquisition and provide additional working capital for the combined businesses, Robo 3D has confirmed it has received commitments to place 130,000,000 shares at a price of A$0.25 per share, subject to approval of shareholders at an upcoming EGM.
In addition, the Company has drawdown a further A$250,000 from an existing secured term loan. At the same time the loan, which can be converted to shares at an issue price of A$0.45 per sharel, has been extended until 31 July 2019.
Robo 3D is based in California, USA and is primarily focussed on the design and distribution of 3D printers for the desktop 3D printing market.