Techstep ASA — M&A Activity 2017

Feb 2, 2017

Techstep announces acquisition of Mytos, agreement in principle regarding acquisition of Apro and fully underwritten private placement of NOK 100 million

Techstep announces acquisition of Mytos, agreement in principle regarding acquisition of Apro and fully underwritten private placement of NOK 100 million

On 1 February 2017, Techstep ASA ("Techstep" or the

"Company") entered into a binding agreement to acquire Mytos

AS ("Mytos") for an aggregated purchase price of NOK 120.0

million, and entered into an agreement in principle to

acquire Apro Tele og Data AS ("Apro") for an aggregate

purchase price of NOK 15.5 million. In connection with these

transactions and to finance further acquisitions, the company

intends to complete a fully underwritten private placement

(the "Private Placement") of NOK 100 million at NOK 5.70 per

share.

Mytos acquisition

On 1 February 2017, Techstep entered into a binding agreement

to acquire the entire share capital of Mytos AS ("Mytos") for

an aggregated fixed purchase price of NOK 120.0 million.

Mytos is a software as a services company with mainly

recurring revenue. Mytos offers a full range of telecom

expense management ("TEM") modules, all with proprietary

software and highly user friendly implementation and

operation. Mytos has an active end user base of approximately

122,000 and 600 customers per year-end 2016. This acquisition

strengthens Techstep's solution portfolio with new

capabilities and adds to the customer base.

Mytos delivered revenues of NOK 12.3 million, NOK 16.6

million and NOK 21.5 million in 2014, 2015 and 2016,

respectively, and delivered EBITDA of NOK 3.5 million, NOK

6.8 million and NOK 6.9 million in 2014, 2015 and 2016,

respectively. Adjusted EBITDA in 2016 was NOK 9.2 million.

Total assets of Mytos were NOK 6.0 million, NOK 8.6 million

and NOK 7.2 million at year-end 2014, 2015 and 2016,

respectively. Mytos has a net debt position of approximately

NOK 2.2 million as at year-end 2016. As of the time of

transaction, Mytos has 11 employees.

The purchase price payable at closing of NOK 120.0 million

will be settled with NOK 50.0 million in cash (financed by

the Company's current cash position) and NOK 70.0 million in

Techstep shares, to be issued at a price of NOK 6.00 per

Techstep share, corresponding to 11,666,667 new Techstep

shares ("Mytos Consideration Shares"), equal to 11.38 per

cent of the currently issued share capital of Techstep. The

shares will be issued under Techstep's current board

authorization to issue shares approved at the extraordinary

general meeting held at 4 November 2016. The Mytos

Consideration Shares will be issued on a separate ISIN

pending approval and publication of a listing prospectus

which is currently being prepared by the Company. Following

publication of the prospectus, the Mytos Consideration Shares

will be transferred to the ordinary ISIN of the Company and

will from such time be admitted to trading on Oslo Børs.

Closing is subject to customary conditions, including certain

third party consents and entering into new employment

contracts with key employees, and is expected ultimo February

2017. The sellers will have a lock-up on the Mytos

Consideration Shares with 1/3 until 7 November 2017, 1/3

until 7 May 2018 and 1/3 until 7 November 2019, subject to

certain exceptions.

Mytos is currently owned 100 per cent by Mytos Systems AS.

The CEO of Mytos is Atle Aarak and the Board of Directors

consists of Lars Ole Allum, Anders Brandt, Bent Erik Skaug,

Hans Anders Borgen and Per Gunnar Gulliksen.

Except for the sellers' right to receive the Mytos

Consideration Shares, the transaction does not involve any

specific rights to the benefit of the members of the Board of

Directors or the executive managements of Techstep or Mytos

respectively, nor is any such agreements expected to be

entered into.

Agreement in principle regarding acquisition of Apro

On 1 February 2017, Techstep entered into an agreement in

principle to acquire the entire share capital of Apro Tele og

Data AS ("Apro") for an aggregate purchase price of NOK 15.5

million. The agreement is inter alia subject to due diligence

and negotiation of a share purchase agreement.

Apro was established in 1973 and delivers communication

solutions with focus on mobile communications. Apro sells

hardware, mobile subscriptions and offers consulting services

for larger clients and customer support / maintenance and

repair inhouse. Apro is a part of the Telering brand which

has 115 centers/shops on franchise basis across Norway.

Apro had a turnover of NOK 71 million in 2016 and an EBITDA

of NOK 4 million. The purchase price will be settled with NOK

7 million in cash and NOK 8 million in shares based on a

Techstep share price of NOK 6.00 per Techstep share,

corresponding to 1,333,333 new Techstep shares, and a seller

note in the amount of NOK 500,000. In addition, it has been

agreed that the sellers will have the right to an earn-out

payment up to NOK 4.5 million based on certain criteria's

regarding increased profitability.

The transaction is subject to satisfactory due diligence and

further assumes cash and debt free basis with a normalized

level of net working capital.

Further announcement regarding the Apro acquisition will be

made in due course.

Gaute Engbakk, CEO of Techstep, says:

"With the acquisition of Mytos and Apro we are taking a

significant step forward in positioning Techstep as the

leading provider in the Nordics of the digital workplace

delivering integrated enterprise mobility solutions. The

acquisition of Mytos contributes unique solutions within

telecom expense management software, while we attain a

significant customer base. Apro further brings a large

customer base to provide with our solutions offerings and a

team particularly skilled in in the public sector area."

Fully underwritten Private Placement of NOK 100 million

In connection with the announced acquisitions and to further

strengthen the company's balance sheet for further growth the

Company intends to complete the Private Placement of

approximately NOK 100 million at NOK 5.70 per Techstep share,

corresponding to 17,543,860 shares. Arctic Securities AS and

DNB Markets, a part of DNB Bank ASA, have been engaged as

Joint Bookrunners for the Private Placement (the "Managers").

The Private Placement is fully underwritten by inter alia

Middelborg AS, a company owned by board member Kristian

Lundkvist, Cipriano AS, a company owned by the Chairman of

the Board, Einar J. Greve, Datum AS, and other Norwegian

institutional and private investors (the "Underwriters"). The

Underwriters will receive an aggregate underwriting

commission of NOK 2 million. The Underwriters are guaranteed

allocation of shares in the Private Placement for an amount

corresponding to 50 per cent of its underwriting obligation

in respect of the Private Placement. Middelborg AS, Cipriano

AS, and Datum AS have pre-committed to subscribe for minimum

5,263,158 shares.

The waiver of the preferential rights inherent in a private

placement is considered necessary in the interest of time and

successful completion.

Further information regarding the Private Placement

(including timing) will be announced in due course.

Techstep will acquire the minority shares in Teki Solutions

and Nordialog Asker

The Company will acquire the remaining 21.84 per cent of Teki

Solutions and the remaining 50 per cent of Nordialog Asker.

In order to settle these transactions, 7,515,325 new Techstep

shares will be issued.

Further announcements regarding these two transactions will

be made in due course.

Share option grant

The Board of Directors of the Company has today resolved to

grant 3 million share options to CEO Gaute Engbakk, and 1.5

million share options to each of CFO Marius Drefvelin and

Chief Innovation Officer Mads Vårdal. The option grant is

subject to the approval of the annual general meeting of

Techstep. The options vest in three tranches with 1/3 per

tranche, on the first, second and the third anniversary after

the grant at a strike price of NOK 5.70, 6.50 and 7.00,

respectively. Neither Gaute Engbakk, Marius Drefvelin nor

Mads Vårdal owns currently any shares or rights to shares in

Techstep prior to the option grant. Once the options have

been duly issued, the Company will have issued in total 6

million share options.

Shareholdings

Chairman of the Board, Einar J. Greve, has, through his

wholly owned company Cipriano AS, pre-committed to subscribe

for at least 877,193 shares in the Private Placement.

Further, Cipriano AS has today entered into an option

agreement with Zono Holding AS in which Cipriano AS may

acquire 3,000,000 Techstep shares from Zono Holding AS. The

options vest in three tranches with 1/3 per tranche, on 6, 18

and 30 months after the grant at a strike price of NOK 3.40,

4.30 and 5.00, respectively. All options expire after 30

months. Neither Einar J. Greve nor Cipriano AS owns any

shares or rights to shares in Techstep prior to this.

Board member Kristian Lundkvist has, through his wholly owned

company Middelborg AS, pre-committed to subscribe for at

least 877,193 shares in the Private Placement. Other than the

foregoing, Kristian Lundkvist and his affiliates do not own

any shares or right to shares in Techstep.

Further, Zono Holding AS has in a shareholders meeting on 30

January 2017 resolved to distribute 59,706,969 shares in

Techstep to its 16 shareholders through a capital reduction.

The distribution is inter alia pending a 6 weeks mandatory

creditor notification period and bank approval. Following

completion of the capital reduction, the shares will be

distributed and owned inter alia as follows:

Middelborg Invest AS: 25,525,228 shares

Datum AS: 15,720,370 shares

Cipriano AS: 2,774,182 shares

Antares Group AS (owned by Gaute Engbakk): 554,838 shares

Duo Jag AS (partly owned by member of the Board of Directors,

Ingrid Leisner): 554,834 shares

Following the completion of the capital reduction, Zono

Holding AS will own 3,000,000 shares in Techstep.

Financial update

Preliminary figures show that Techstep delivered revenues of

NOK 573 million and EBITDA as reported of NOK -3 million for

the full year 2016. EBITDA including Nordialog Asker,

adjusted for one-off costs and the annualization effect of

restructuring initiatives, is NOK 24 million.

Please find attached an updated Techstep company

presentation.

There will also be an investor presentation on Thursday 2

February 2017 at 12:00 at Hotel Continental. Please register

your attendance to events@arctic.com or ca@dnb.no.

For further information please contact:

Gaute Engbakk, CEO of Techstep: +47 91633281

Marius Drefvelin, CFO of Techstep: +47 95895690

Einar J. Greve, Chairman of the Board of Techstep: +47

90027766

About Techstep

Techstep is a B2B solutions and services provider offering

mobile hardware & subscriptions and solutions. The company

has a customer base of approximately 3,600 companies with

approximately 220,000 end users. Techstep offers its clients

integrated enterprise mobility solutions.