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Headquartered in Vancouver, Canada, Universal mCloud Corp. announces the signing of a letter of intent to acquire Fulcrum Automation Technologies. In parallel, Fulcrum has entered into a letter of intent to acquire Autopro Automation Consultants Ltd., resulting in a three-party transaction that will make mCloud a major technology provider in oil and gas. The transaction is considered an at arm’s length fundamental acquisition.
mCloud will leverage its AssetCare platform for AI, 3D, and cloud computing with the industrial automation expertise and customer footprint of Fulcrum and Autopro to integrate AI-based technologies across the oil and gas industry. This announcement follows on from the company’s prior announcement of the signing of a C$15 million licensing agreement with Fulcrum.
As a result of the transaction, mCloud expects to add approximately C$35 million in revenue and C$5.5 million in EBITDA.
The transaction will be structured such that Fulcrum will initially acquire 100 percent of the issued and outstanding shares of Autopro for cash and common shares of Fulcrum (the “Autopro Acquisition”). Immediately thereafter, mCloud will acquire 100 percent of the issued and outstanding shares of Fulcrum, which is currently debt-free.
Upon completion of the transaction, mCloud will own 100 percent of Fulcrum and indirectly Autopro. The total consideration value, subject to adjustments, will be satisfied through C$18 million of cash, to be funded by C$18 million debt to be raised prior to closing, and the issuance of 60 million mCloud common shares. The shares will be distributed to the shareholders of Fulcrum and Autopro with exact allocation yet to be determined. Based on a closing share price of C$0.41 on April 23, 2019 the total transaction value is C$42.6 million.
The transaction, which remains subject to satisfactory completion of due diligence, the entering into of a definitive agreement satisfactory to the three parties, and a management information circular prepared in connection with a meeting at which approval of shareholders will be sought, is expected to close in July 2019.
Additionally, completion of the transaction is subject to the satisfaction of customary closing conditions and required third party approvals, including the approval of the TSX Venture Exchange and mCloud shareholders. Additional information concerning the transaction will be provided in a subsequent news release upon execution of definitive agreements by the parties.