Damstra (ASX:DTC) share price soars 10% on acquisition news

The technology company is having a good day.

| More on:
two colleagues high five each other as they sit side by side at a long desk in front of their laptop computers in an office environment.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Damstra Holdings Ltd (ASX: DTC) share price has burst out of the gate in today's session.

Shares in the tech company are flying higher following the announcement of an acquisition.

Let's take a look at why investors are bidding the Damstra share price higher today.  

Damstra share price flies on TIKS Solutions acquisition

Shares in Damstra are flying today after the company announced a key acquisition.

The tech company publicised that it has entered into a share sale agreement to acquire 100% of the shares in TIKS Solutions Pty Ltd (TIKS).

TIKS is an Australia-based workplace safety and compliance management company, with approximately 70 clients across a wide range of sectors.  

Damstra provided several highlights on the management company's performance in FY21.

TIKS was able to generate audited revenue of $4.14 million for the full-year and remained free cash positive.

As a result, the acquisition is not expected to negatively impact Damstra's FY22 operating cash flow.

According to the update, the acquisition will comprise $2.5 million in cash from Damstra's existing cash reserves.

In addition, Damstra will issue an equivalent of $12 million in its shares, with a further $3.5 million in cash to be paid 12 months after completion.

Damstra noted that the acquisition is in line with the company's strategy to pursue inorganic opportunities and consolidate existing markets.

Damstra's CEO, Christian Damstra, commented:

TIKS is an exciting natural fit for Damstra that will bring further scale to our business, enhancing our leadership position in workforce management in Australia and expanding our international footprint.

How did Damstra perform in FY21?

The Damstra share price has struggled since reporting its full-year results for FY21.

Highlights from the company's report included;

For FY22, Damstra has renewed its aim to break even in free cash flow and realise cash synergies from its acquisition of Vault Intelligence Ltd (ASX: VLT) late last year.

Snapshot of the Damstra share price

Shares in Damstra have tanked more than 40% since the start of the year.

However, today's announcement has reignited interest in the company's share price.

At the time of writing the Damstra share price is trading more than 10% higher for the day at around 95 cents.

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Damstra Holdings Ltd. The Motley Fool Australia owns shares of and has recommended Damstra Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

A player pounces on the ball in the scoring zone of the field.
Technology Shares

Why this ASX sports tech share looks like a winner

Catapult Group has been delivering outstanding returns for investors. Will the winning streak continue?

Read more »

A woman smiles as she sits on the bus using her phone and listening to music through headphones.
Technology Shares

Why this top fund manager thinks this ASX tech share can continue rising

Investors can be excited about this stock.

Read more »

Man sitting in a plane looking through a window and working on a laptop.
Broker Notes

Macquarie tips 28% upside for this ASX All Ords tech stock

Let's see what the broker is saying about this growth stock.

Read more »

happy teenager using iPhone
Share Gainers

Up 96% since April, should I still buy Life360 shares today?

A leading expert offers his verdict on the growth outlook for the surging Life360 share price.

Read more »

A female soldier flies a drone using hand-held controls.
Technology Shares

DroneShield shares charge higher on European expansion plans

This high-flying stock is surging again on Tuesday. But why?

Read more »

Human head and artificial intelligence head side by side.
Technology Shares

NextDC share price jumps 8% on big news

Another big announcement has caught the eye of investors this morning.

Read more »

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.
Technology Shares

Up 60% in two months, is it too late to buy Pro Medicus shares?

Pro Medicus has been delivering solid returns for years. Can the trend continue?

Read more »

Group of people in a gym high five each other surrounded by gym equipment.
Mergers & Acquisitions

This ASX tech stock is hitting a record high on acquisition news

The market is responding positively to this news. Let's dig deeper into it.

Read more »