Back in 2020 Grafenia set up a facility to issue up to £50m in ‘perpetual bonds‘ on the Frankfurt Stock Exchange.
It plans to raise £4.25m via new bonds, of which £1.25m will be used for the initial consideration for the purchase of Vertical Plus.
Vertical Plus is based in Plymouth and has developed a “growth focused” ecommerce platform that is used by a wide variety of companies across a number of different sectors – with “no industry too niche or too specialised”.
Customers include large-format and trade print specialist Netprinter, also based in Plymouth.
Grafenia said the Vertical Plus platform “enables and simplifies the implementation of large inventory ecommerce”.
It employs 25 staff and had sales of £2.01m and EBITDA of £250,000 in the year to 31 March 2022.
The takeover involves a further £1m to be paid on the first anniversary of the sale, and a further £630,000 payable over three years if the business hits performance targets.
Grafenia acting CEO Gavin Cockerill described the two businesses as culturally and strategically aligned.
“The ecommerce solution we provide our Nettl partners can be enhanced with the solutions Vertical Plus provides. We're excited about the growth potential our route to market could help bring. This is another step toward growing our software nucleus,” he said.
Vertical Plus managing director Nicola Bonning will step down when the deal completes, while CEO and majority shareholder David Gadd will remain a consultant for 12 months.
The buy is conditional on the completion of short form sale and purchase agreements by minority shareholders of Vertical Plus and Grafenia being successful in raising the necessary funds via the bond facility.
Grafenia sold its Works Manchester manufacturing operation to PFI Group in May in order to refocus on software.
The business said it had further software acquisitions in its pipeline with combined sales of around £4m and EBIT of £1.3m.
The balance of the bond issue will be used to fund the pipeline buys.
Grafenia also issued a trading update and said that from June-August like-for-like total revenue was 11% higher than in the same period last year.
“Since the start of the financial year, we've continued to add new Nettl partners in the UK and US. As detailed in our most recent annual report, last year we experienced some churn in partner count. Particularly those partners who found it difficult to diversify from selling just print during Covid affected times.
“We've made some improvements in the onboarding process and have seen churn rates reduce.”
Grafenia said that despite inflationary pressures the firm remained confident of reaching its mid-term objective of 10-15% EBITDA on a monthly run rate.
