Embattled business telephony provider, Hostech (ASX:HTC), has entered into a non-binding understanding for the $5.75 million acquisition of an unnamed company.
According to a statement released to the ASX, due diligence on the deal is expected to be completed by mid-August, at which point the takeover target’s name will be announced.
The statement goes on to claim the acquisition will “deliver in excess of $10m revenue and $2m EBIDTA [Earnings Before Interest Depreciation Taxes and Amortisation]”.
The company aims to satisfy a substantial portion of the cash requirements by leveraging the assets of the acquired company.
Of the purchase price, $2.75 million will be provided in cash on top of $3 million in Hostech shares. At time of writing, shares were trading at $0.028 each.
The takeover bid comes after a horror 2007/2008 financial year loss of $9.7 million.
Its half-yearly results ending December 31, 2008, Hostech pointed to a $481,469 loss, which was an improvement on the $3.8 million loss in the previous corresponding period.