MCS SERVICES LIMITED MCS Services Limited (ASX:MSG) signed a Binding Terms Sheet to acquire Highways Traffic Pty Ltd from James Capelli and Carol Capelli for AUD 3.1 million on January 23, 2022. The purchase consideration includes, AUD 1.8 million cash on settlement, which MCS intends to fund from MCS's existing cash reserves; AUD 0.26 million worth of ordinary shares in MCS Services, issued on settlement, calculated at the 15 day weighted average, escrowed for 12 months; up to a total of AUD 0.54 million payable post-settlement, in quarterly instalments, subject to Highways Traffic's revenue performance tracking at AUD 7 million per annum; up to an additional AUD 0.35 million payable post-settlement conditional on Highways Traffic's revenue exceeding AUD 8.4 million in the 12 months post-settlement. A deposit of AUD 0.15 million is payable on exchange of the definitive sale contract documentation.
The General Manager of Highways Traffic and its key staff will continue in their current roles. The acquisition is subject to achieving certain conditions precedent, the key conditions which include the finalization of due diligence procedures, signing of definitive sale contract documentation, transfers of Highways Traffic's customer contracts, agreement by Main Roads for the continuation or assignment of the necessary traffic planning and traffic management licenses to MCS, the general manager continuing employment and a lease renewal and assignment or extension for the key premises on terms acceptable to MCS. There is no requirement for shareholder approval for the proposed transaction and there is no change to the Board arising as a result of the proposed transaction.
The acquisition is expected to be earnings per share accretive and it may well open doors for further expansion. As of September 5, 2022, completion of transaction is subject to a number of operational, licencing and financing pre-conditions. The Company and the Vendor are working to complete within the next 14-21 days.
