Tomizone nixes plans to acquire Social Light, will enter tech purchase agreement

Monday 14th August 2017

Auckland-based wi-fi service provider Tomizone has nixed plans to buy Philippine-based Social Light and will look to enter a technology purchase arrangement, it said in a release to the Australian stock exchange, where its stock is listed.

Late last year, Tomizone announced plans to acquire 100 percent of the issued capital in Social Light through the issue of up to 24,500,300 ordinary shares at a notional issue price of 13.27 Australian cents per Tomizone. In February, it said the two companies had already started technical cooperation and had plans to shortly launch new products developed with Social Light. Today it said that following a final review of the Social Light business "both parties have mutually and amicably agreed not to proceed with the acquisition."

Chairman Ian Bailey was not immediately available for comment but according to Tomizone, the same result can be achieved by the two businesses remaining independent. The aim is to now ink a technology purchase and IP transfer agreement, which will see Tomizone owning the software, source code and intellectual property of the software required by Tomizone for its customers. Social Light will also continue as Tomizone's development partner for the maintenance and ongoing development of its software, it said.

According to Tomizone, the deal is less dilutive as it no longer has to issue the ordinary shares. It retains access to Social Light's technology products and capabilities through agreed procurement terms. It said there is a resulting quarterly overhead saving of A$100,000 and less time commitment managing a business with operations in the Philippines.

"We can retain all the value that Social Light would have delivered through the acquisition, but it is being achieved through a simpler and more flexible technology acquisition arrangement," said Bailey.

While Tomizone opted to not buy Social Light, Bailey said it has commenced "an aggressive acquisition campaign to grow the business and expand its customer base and market reach." He said it is looking for potential acquisition targets that provide value by way of both vertical and horizontal integration.

According to the company "a number of revenue generating operations have already been identified and are being carefully assessed by the board."

Tomizone joined ASX through a reverse listing on June 1, 2015, but faced significant challenges due to delays with product feature launches and organisational readiness, and has reported consecutive losses.

It last traded at 1.2 Australian cents.

(BusinessDesk)

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