Two small cap IT services providers are one step closer to creating a $300 million industry player, after independent expert KPMG Corporate Finance came out in favour of the merger.
ASX-listed DWS Ltd has offered $1 cash and 0.39 of its own shares for SMS Management & Technology, with the deal to be done via a scheme of arrangement.
KPMG Corporate Finance told SMS Management investors that the offer was in the best interests of shareholders.
It said SMS Management was worth $1.52 to $1.76 a share, while shareholders were in line to get $1.57 to $1.64 a share value under the DWS deal.
SMS Management shareholders have been asked to approve the deal at a shareholder meeting in Melbourne on June 14. If successful, the two companies would be combined in early July.
Putting the two together would create a company with $463.7 million annual revenue and $37.7 million EBITDA, before synergies.
DWS said it expected synergies worth $5 million a year should the transaction go ahead as planned.
SMS Management shares were up 1¢ to $1.60 on Friday morning.
Macquarie and Corrs Chambers Westgarth are advising SMS Management. Gresham is advising DWS.
