The consideration will be funded via a new £17mln loan and £50mln in cash raised through a placing of 12.5mln shares at 400p a pop.
The MeetingZone Group is a UK-headquartered conferencing services provider with about 6,000 customers worldwide and operations in the UK, Germany, Sweden and North America.
The MeetingZone Group sells its own stand-alone audio conferencing services, resells Cisco's WebEx and Spark collaboration services, and also offers a value-added audio services product for Microsoft Skype for Business. In the 12 months to 31 December 2017, the revenue mix from these three lines of business was 68.0%, 21.0% and 11.0%, respectively.
In 2017, the group made adjusted underlying earnings (Ebitda) of £5mln on revenue of £22.5mln.
LoopUp, which has a market capitalisation of £176mln, said the acquisition constitutes a reverse takeover under Aim’s rules and is therefore dependent on shareholder approval.
The directors believe that the enlarged group would be well-positioned to migrate the MeetingZone Group’s audio conferencing business to the LoopUp product platform.
On an unaudited pro forma basis for the whole of 2017, the revenue of the enlarged group would have been £39.9 million and adjusted Ebitda would have been £8.4 million - respectively a 129% and 144% increase compared to the LoopUp Group on stand-alone basis.
“This greater scale will promote the established ‘network effect’ in the LoopUp product and improve buying power with its suppliers,” LoopUp said.
The LoopUp directors have identified cost savings of around £500,000 in 2018 and at least £2.8mln in the first full financial year of ownership (i.e. 2019).
The directors plan to reinvest further in the business in order to drive accelerated organic growth; they are targeting top-line growth for the enlarged group of more than 20% by 2020.
In summary, the directors believe the acquisition will materially enhance earnings per share in 2019.
"The acquisition of MeetingZone will help us to enhance our already strong competitive position, add significant scale to our business and amplify the network effect of our offering,” said Steve Flavell, the co-chief executive officer of LoopUp.
“It will also provide us with an opportunity to reinvest further in our business, in particular, our people, product and our 'Pods',” he added.