Smoove LON:SMV, the AIM-listed, software company providing data platforms to conveyancers, mortgage brokers and home-movers, has for the fifth time extended the deadline by which Pexa Group [ASX:PXA], the Australian digital property settlements platform, has to make a formal offer to buy the Oxfordshire-based conveyancing platform.
Pexa and Smoove initially opened negotiations on a potential takeover of the British property transaction platform by the Australian property exchange network in April of this year, as previously reported. The Australian company has been undertaking due diligence since.
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Smoove said in a statement to the market that: “constructive discussions have continued between the parties”, and “that PEXA has advised the [Smoove] that it has substantially completed due diligence.”
The current hiatus, said Smoove was: “[…] in order to allow time for, amongst other things, the parties to progress the drafting of the relevant transaction documentation.” However, the company warned: “[…] there can be no certainty either that an offer will be made nor as to the terms of any offer, if made.”
The acquisition would be an all-cash transaction. The new deadline has now been extended to 6th October, by which time Pexa must make an offer or withdraw from the process. However, Smoove can apply to the Stock Exchange’s Panel on Takeovers and Mergers for another extension if needed.
As previously reported it is believed that there are other bidders for Smoove waiting in the wings.
In the company’s most recently released results, the company reported a 7.4% increase in revenue to GBP20.6m, despite the doom and gloom that has descended on the UK housing market. Smoove’s gross profit was flat year-on-year at GBP7.8m, but EBITDA fell into loss of GBP4.8m because of the company’s investment in its core eConveyancer business and in new product areas.
Loss before tax
This led to a loss before tax of GBP5.6m, up from the GBP4.9m loss in 2022. The company had GBP10.1m cash in hand following a GBP3.7m return of capital through a tender offer in January.
The current year has started strongly for Smoove, and transactions have remained stable albeit with lower instructions due to the state of the UK housing market and economy, and management believes that the company is trading within expectations. Chief executive, Jesper With-Fogstrup thinks that the company will consume less cash this year, having made significant investment in the year that has just passed, and profit is in line with expectations.
The company closed trading last week (8th September) at 44.6p. Smoove has offered a 20.5% year-to-date return and a -13.9% one-year return, with its shares ranging between 27p and 52.6p over a 52-week period.
The company has an GBP25.4m market capitalisation.
As reported, Pexa was established in Australia in 2010 as the world’s first digital settlement platform born out of a 2008 Council of Australian Governments’ initiative to transition property lodgement and settlement away from an outdated paper-based process to a more efficient digital settlement process. Today more than 80% of all property transactions in Australia are completed via PEXA.
The Pexa brand operates in the UK as the trading name of Digital Completion UK Limited, established as a holding company in August 2020 and based at Portland Street, London. The company says it is working with the Bank of England “to streamline the re-mortgaging and property completion experience from start to finish,” to “advance how Britons buy and sell homes.”
Currently Pexa UK is involved in the remortgaging side of the business offering technology solutions and platforms to UK lenders, lawyers, and conveyancers in England and Wales, but is due to expand into sale and purchase in 2024.
Smoove listed on AIM in July 2014 and provides a software platform for home moving. The platform helps home movers to find and compare solicitors, estate agents, and other services related to moving home. Smoove also offers a range of tools and resources to help home movers with the administrative aspects of moving, such as packing lists and checklists.
