The EROAD Ltd (ASX: ERD) share price has returned from its trading halt and is pushing higher.
At the time of writing, the transport technology company's shares are up 2% to $5.90.
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Why was the EROAD share price in a trading halt?
The EROAD share price was placed in a trading halt on Wednesday so that it could launch an underwritten NZ$64.4 million conditional placement to partly fund an acquisition.
This morning the company revealed that the placement was successfully completed after receiving strong support from investors.
According to the release, the company has raised NZ$64.4 million at NZ$5.58 (A$5.25) per new share. This represents a 9.2% discount to the EROAD share price prior to its trading halt.
The company will now seek to raise a further NZ$16.1 million via a share purchase plan. This will be undertaken at the lower of the placement price or the five-day volume weighted average price prior to the closing date.
Why is EROAD raising funds?
EROAD is raising funds after entering into a conditional agreement to acquire 100% of Coretex Limited for NZ$157.7 million upfront and NZ$30.6 million in contingent consideration payable in FY 2023.
Coretex is a telematics vertical specialist provider delivering enterprise grade solutions. It is forecast to deliver annualised monthly recurring revenue (AMRR) of between $50-$53 million and EBITDA of $7-9 million in FY 2022.
Management believes the acquisition will be transformational for the company.
EROAD's Chief Executive Officer, Steven Newman, commented: "The acquisition of Coretex is truly transformational for EROAD. Accelerating our key growth metrics by two years in North America and Australia and positioning us to become a bigger player in the global telematics market. EROAD and Coretex both aspire to create a safer, more sustainable and more productive society. Combining EROAD's expertise in broadly adopted regulatory telematics solutions with Coretex's extensive vertical telematics expertise and products creates an advanced market fit."
The acquisition is expected to complete in the second half of FY 2022 and is subject to a number of conditions. This includes Commerce Commission clearance in relation to Coretex's New Zealand business, Overseas Investment Office approval, and EROAD shareholder approval.
The EROAD share price is now up 25% in 2021.
