Snaps up top-notch mobile diagnostics firm
​Blancco is the world's leading global developer of 'data erasure' software, used to protect governments & corporates from ID/data theft and cyber-crime, along with being a pioneer in smartphone diagnostics (Xcaliber).
Historically, you would normally have to send a broken mobile off to a repair centre, which could literally take weeks. Fortunately there is now a much faster, cheaper and simpler option - by plugging the device into Xcaliber's clever diagnostics software, which identifies and fixes the vast majority of common handset faults.
So good are the applications that today Blancco announced it had bought the remaining 51% stake of Xcaliber Technologies that it did not already own, for up to $5.5m in cash. $0.8m was paid on completion in March, with the other $4.7m spread over the next 3 years, dependent on the achievement of pre-determined revenue targets.
Not only operating is Xcaliber active in a global addressable market perhaps worth >$200m pa: after a successful 6 month trial covering 200 in-store kiosks, it has signed a ground-breaking 3 year licensing agreement (non-exclusive) with a major North American telco network (as yet unnamed) that will see its programs rolled-out across >5,000 of the customer's US outlets.
We have accordingly upgraded our forecasts, and believe that the acquisition will be earnings enhancing within the first 12 months. That said, the stock has risen by >10% since our previous note in March, meaning that the strike price for the forthcoming £50m tender offer (run as a Dutch auction with a 215p-250p range) is likely to be nearer 230p/share, as opposed to our original thoughts of 200p. Consequently with a higher assumed sharecount (ie post buyback), we have trimmed our share price target from 240p to 225p.
Blancco Technology Group provides data erasure software. Co.'s segments are: Erasure, which enables customers to erase and repurpose IT devices with certified software; and Diagnostics, which provides diagnostics of smartphones and tablets, as well as new diagnostics tools. The erasure division focuses on development and delivery of solutions, includes: Blancco, a provider of data erasure software; SafeIT, which involved in cloud and networked data erasure; and Tabernus, which provides software erasure products. The diagnostics division consists of the Mobile Diagnostics business, comprising Xcaliber Technologies, a smartphone diagnostics software business and its SmartChk solution.
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