Kiliaro AB (publ) (“Kiliaro” or the “Company”) expands its business by acquiring Sosyopix İnternet Hizmetleri A.Ş (“Sosyopix”), the leading operator in online photo printing in Turkey (the “Acquisition”). Sosyopix has sales of approximately SEK 30.5 million and approximately 40 employees. The purchase price totals EUR 5,225,178. 81 percent of the purchase price will be paid in cash financed through a mix of existing funds and a partially guaranteed rights issue resolved by the board of directors today subject to the subsequent approval of the extraordinary general meeting (the “Rights Issue”) and approximately 19 percent will be paid using 6,200,446 newly issued shares in Kiliaro (the “Issue in kind”). An additional earn out consideration based on Sosyopix EBITA for 2023, 2024 and 2025 with a maximum amount of EUR 2,125,000 may also become payable in parts in connection to the EBITA for each period being established. The agreement for the Acquisition has been signed today on March 13, 2023 and closing of the Acquisition is expected to take place on or about May 12, 2023. Closing is conditioned upon that the Company’s shareholders approve the board of directors’ decision to issue the consideration shares and that the Company has secured the financing of the cash consideration.
TheAcquisition is a strategic milestone to become the super app for personal photomanagement and establishes Kiliaro in Turkey and is in line with Kiliaro’slong-term business strategy and visionregarding the product offering. Sosyopix was founded in 2014 by the twobrothers Sezig and Emre Abat. The company is active in digital photo printing,by offering customers the ability to print digital photos at home via theSosyopix app, which can be downloaded for free from Google Play or App Store.Examples of products offered are polaroid pictures, polaroid magnets, photobooks, calendars and canvas.
Since 2018, Sosyopix hasincreased its turnover from approximately SEK 10 million to approximately SEK30.5 million in 2022 with an EBITDA of approximately SEK 5.5 million. Theturnover has been generated exclusively on the Turkish market. Sosyopix ownsits own machine park in Istanbul and delivers around 1,500 orders per day tocustomers all over Turkey. Kiliaro launchedits offering on the Turkish market a year ago and the acquisition simplifiesthe Company's market access in the country that offers favorable costadvantages in terms of pricing to end customers.
Kiliaro further assesses thatSosyopix’s product line in combination with their geographic presence is wellin line with the Company’s overall business plan and strategy to offer ascalable and comprehensive solution. The combination of Kiliaro's solution forstorage, sharing and socialization and Sosyopix's solution for digital photoprinting will create a competitive player with compelling growth opportunitiesas it opens up for new commercial opportunities and innovations. Kiliarofurther expects the Acquisition to come with cost synergies primarily relatedto consolidation of the two organizations and their respective sales, marketingand product development teams.
The acquisition of Sosyopixwill transform Kiliaro's identity on the digital photo market. By completingthe Acquisition, Kiliaro will possess the capability to offer innovative andscalable solutions to its customers on an international level. The addition ofSosyopix's assets will further significantly increase Kiliaro's revenuestreams, resulting in a stronger financial position for the Company to pursueits M&A strategy with full vigor as a profitable organization with positivecash flow.
By acquiring Sosyopix, Kiliarowill also gain access to a large customer base, which is expected to result intangible commercial synergies. The joint group's combined customer base ofapproximately 2 million users will have access to a wider range of products andservices, creating excellent opportunities for additional sales andcross-selling. Kiliaro's acquisition of Sosyopix will further strengthen itsinternational presence, which is a significant step in the Company’s globalexpansion. The Acquisition will also bring new features to Kiliaro's app, withthe addition of printing service, which is expected to result in increased userengagement.
"We are thrilled to announce that we aremaking great strides towards creating the ultimate super app that we've beendreaming of. It will be a comprehensive presence in the photo sector that willcater to all needs in personal photo management, from storage and sharing toediting and printing, and much more. Our vision is to provide all of thesefeatures within one single, user friendly application, and this acquisition isa major milestone in our long-term M&A strategy. With these added resourcesand expertise, we are confident that we can continue to drive innovation in theindustry and deliver an application with high user experience." says Elie Komo, CEO of Kiliaro.
"As the number one player in Turkey foronline photo printing, we at Sosyopix are proud of what we have accomplished.However, we believe that our partnership with Kiliaro will take us to a wholenew level, and allow us to achieve something truly remarkable. We wereimmediately drawn to Kiliaro's compelling vision and mission, and we arethrilled to be a part of this global movement. With the resources and expertiseavailable to us under the Kiliaro umbrella, we are confident that we can expandour reach and make a significant impact in the worldwide online photo printingmarket. We are eager to start contributing our part towards building somethingtruly unique and game-changing in this industry." says Emre Abat, CEO of Sosyopix.
Financials Sosyopix
In the twelve months endingDecember 31, 2022, Sosyopix is expected to record revenues of 30.5 MSEK, GrossProfit of 10.6 MSEK, and Adjusted EBITDA of 5.5 MSEK. This corresponds to agross margin of 35 percent and an adjusted EBITDA margin of 18 percent. Thebusiness employs around 40 employees and is headquartered in Istanbul, Turkey.
As of 2022, Sosyopix has soldto over 500,000 customers. In order to manage inflation in the Turkish market,Kiliaro estimates that it needs to implement a global payment solution thatconverts purchases from end customer to the desired currency, which is expectedto reduce the risk of currency losses. Furthermore, inflation in the Turkishmarket partly benefits the Company as it can keep manufacturing costs low whileselling on other markets, such as Europe and the Nordics, at competitiveprices.
Financials Kiliaro
In the twelve months endingDecember 31, 2022, Kiliaro recorded revenues of 96 TSEK, an EBIT of -11.7 MSEK,and Adjusted EBITDA of -10 MSEK. Earnings per share is -1.34 SEK. In 2022,Kiliaro's user base increased by 218 percent over the year. In total, Kiliarohas 6 business employees and 12 consultants working for the Company full time.Kiliaro’s headquarters is located in Stockholm, Sweden.
Financing
The purchase price is EUR5,225,178, of which approximately (i) 81 percent will be paid in cash financedthrough a mix of existing cash balance / existing credit facilities andexpanded credit facilities and the Rights Issue (the “Cash Consideration”) and(ii) approximately 19 percent will be paid through the Issue in kind. The CashConsideration will be paid to the sellers of Sosyopix over a period of 24months from closing of the Acquisition.
The board of directors ofKiliaro intends to call for an extraordinary general meeting (the “Extraordinary General Meeting”)to resolve on approval of the Rights Issue and to resolve on the Issue in kindon essentially the following conditions:
The Issue in kind in brief
· The total subscription price amountsto EUR 990,417.
· The value of the contribution inkind has been determined by the board of Kiliaro based on future discountedcash flows, turnover and growth compared to other participants on the market.
· For existing shareholders, the Issuein kind results in a dilution effect of approximately 41 percent of the capitaland votes of the Company.
· The Issue in kind increases thenumber of outstanding shares with 6,200,446 shares from 8,855,308 shares to15,055,754 shares and increases the number of votes with 6,200,446 votes from8,855,308 votes to 15,055,754 votes.
· The Issue in kind will increase theshare capital by SEK 620,044.6, from SEK 885,530.8 to SEK 1,505,575.4.
The Rights Issue in brief
· Kiliaro intends to use the netproceeds of the Rights Issue to part-finance the Acquisition.
· The Rights Issue comprises a maximumof 15,180,528 shares. If fully subscribed, the Rights Issue will provide theCompany with issue proceeds of approximately SEK 20.5 million before issuecosts.
· Existing shareholders in the Companyas of the record date of April 3, 2023 will receive one (1) subscription rightfor each share held on the record date. Seven (7) subscription rights entitlethe holder to subscribe for twelve (12) shares in the Rights Issue.
· The subscription price in the RightsIssue is set at SEK 1.35 per share.
· Subscription in the Rights Issue cantake place during the period April 5, 2023 – April 19, 2023.
· Trading in subscription rights isexpected to take place on Nasdaq First North Growth Market during the periodApril 5, 2023 – April 14, 2023 and trading in BTA (paid subscribed shares) isexpected to take place on Nasdaq First North Growth Market from April 5, 2023until the Rights Issue is registered with the Swedish Companies RegistrationOffice.
· First Venture Sweden AB, theCompany’s largest shareholder, who holds approximately 37 percent of the totalnumber of shares and votes in the Company, has undertaken to subscribe for newshares corresponding to their pro-rata share of the Rights Issue.
· In addition to the aforementionedsubscription undertaking, external guarantors have provided guaranteeundertakings subject to customary conditions of SEK 10.8 million, whichcorresponds to approximately 53 percent of the Rights Issue. The Rights Issueis thus underwritten to approximately 90 percent by subscription and guaranteeundertakings. Neither the subscription undertaking nor the guaranteeundertakings are secured through bank guarantee, restricted funds, pledgedassets or similar arrangements.
· The Rights Issue, after taking intoaccount the effects of the Issue in kind, increases the number of outstandingshares with 15,180,528 shares from 15,055,754 shares to 30,236,282 shares andincreases the number of votes with 15,180,528 votes from 15,055,754 votes to30,236,282 votes, if fully subscribed.
· The Rights Issue, after taking intoaccount the effects of the Issue in kind, will increase the share capital bySEK 1,518,052.8 from SEK 1,505,575.4 to SEK 3,023,628.2 if fully subscribed.
· For existing shareholders, aftertaking into account the effects of the Issue in kind, the Rights Issue resultsin a dilution effect of approximately 71 percent of the capital and votes ofthe Company if fully subscribed. Shareholders who choose not to subscribe inthe Rights Issue have the opportunity to financially compensate for thisdilution effect by selling their received subscription rights.
· Additional shares may be issued aspart of the payment of the guarantee fee which will have additional minoreffects on the dilution.
· The complete terms and conditions ofthe Rights Issue, including additional information about the Company, will bemade available in an investment memorandum that is expected to be publishedaround April 4, 2023 (the “Memorandum”).
The complete terms andconditions of the Rights Issue and the Issue in kind respectively will beannounced separately in the notice for the Extraordinary General Meeting.
Conditions for theAcquisition
The Acquisition is conditionedupon that (i) the Extraordinary General Meeting has voted in favor of the Issuein kind with the majority vote required under Swedish law and (ii) that Kiliarohas secured its full financing for payment of the cash consideration. Closingof the Acquisition is expected to take place on or about May 12, 2023.
Preliminary timeline
The timeline below isindicative and may be subject to change.
Extraordinary General Meeting to approve the Rights Issue and Issue in kind
March 30, 2023
Last day for trading in the Company's shares including the right to receive subscription rights
March 30, 2023
First day of trading in the Company's shares excluding the right to receive subscription rights
March 31, 2023
Record date for participation in the Rights Issue, i.e., ordinary shareholders who are registered in the share register maintained by Euroclear Sweden AB on this date will receive subscription rights entitling them to participate in the Rights Issue
April 3, 2023
Publication of the Memorandum
April 4, 2023
Trading in subscription rights
April 5, 2023 - April 14, 2023
Subscription period
April 5, 2023 - April 19, 2023
Trading in BTA’s (paid subscribed shares)
April 5, 2023 until the Rights Issue is registered with the Swedish Companies Registration Office
Announcement of the final outcome of the Rights Issue
April 21, 2023
Expected closing of the Acquisition
May 12, 2023
Subscription andguarantee undertakings
The Company’s largestshareholder, First Venture Sweden AB, has undertaken to subscribe for shares inthe Rights Issue corresponding to their pro rata share equaling approximatelySEK 7.6 million and approximately 37 percent of the Rights Issue.
In addition to the subscriptionundertaking, a guarantee syndicate, syndicated by G&W Fondkommission, hasprovided guarantee undertakings subject to customary conditions which, inaggregate, amount to SEK 10.8 million corresponding to approximately 53 percentof the Rights Issue. Consequently, the Rights Issue is secured to approximately90 percent through the aforementioned subscription and guarantee undertakings.
A guarantee fee will be paid tothe guarantors, based on current market conditions, of sixteen (16) percent ofthe guaranteed and allotted amount. Eight (8) percent of the fee will be paidin cash and eight (8) percent will be paid by set-off against shares to thesame terms as in the Rights Issue. No fee is to be paid for the subscriptionundertaking that has been entered into by First Venture Sweden AB. Neither thesubscription undertaking nor the guarantee undertakings are secured throughbank guarantees, restricted funds, pledged assets or similar arrangements.
Further information regardingthe parties who have entered into subscription and guarantee undertakings willbe presented in the Memorandum.
Lock-up arrangements
Sosyopix is being acquired fromthe two founders of Sosyopix (the “Founders”).The Founders have undertaken towards the Company not to divest the sharesreceived in the Issue in kind during a lock-up period of 36 months from theclosing. In addition, the CEO of Kiliaro has undertaken towards the Foundersnot to divest his shareholding in the Company for a lock-up period of 36 monthsfrom the closing.
Due Diligence
Prior to the signing of thepurchase agreement, Kiliaro together with its Turkish advisers, BDO Turkey andBoden Law, performed a so-called due diligence of certain business, financialand legal information regarding Sosyopix.
Advisors
G&W Fondkommission isacting as financial advisor to the Company in the Rights Issue. AdvokatfirmanDelphi is acting as legal advisor to Kiliaro in the Acquisition, including theRights Issue and Issue in kind with regards to matters of Swedish law. BodenLaw is acting as legal advisor to Kiliaro in the Acquisition with regards tomatters of Turkish law.
For furtherinformation, please contact:
Elie Komo, CEO Kiliaro AB
Tel: +46 72 33 33 026
E-mail: elie@kiliaro.com
Certified adviser
SvenskKapitalmarknadsgranskning AB
The information in thispress release is of the nature that Kiliaro AB (publ) is obliged to make itpublic pursuant to the EU Market Abuse Regulation. The information wassubmitted for publication, through the agency of the contact person set outabove, on March 13, 2023 at 6 pm (CET).
Kiliaro is a social photogallery app for individuals looking for the most convenient way to store andshare memories. With Kiliaro's social platform, you get innovative features forsharing photos and videos - directly from your photo gallery to the recipient'sgallery where you can then interact around the content. Together with unlimitedspace and high standards of privacy and security, your most precious digitalmemories are stored without you losing control of them. Kiliaro is listed onNasdaq First North Growth Market, with the ticker symbol KILI. Read more atkiliaro.com
Important information
The information in this pressrelease does not contain or constitute an offer to acquire, subscribe for orotherwise trade in shares, subscription rights or other securities in Kiliaro.The information contained in this announcement is for background purposes onlyand does not purport to be full or complete. No reliance may be placed by anyperson for any purpose on the information contained in this announcement or itsaccuracy, fairness or completeness.
This announcement is not aprospectus for the purpose of Regulation (EU) 2017/1129 of the EuropeanParliament and of the Council of June 14, 2017 on the prospectus to bepublished when securities are offered to the public or admitted to trading on aregulated market, and repealing Directive 2003/71/EC (together with any relatedimplementing and delegated regulations, the “Prospectus Regulation”). Investors shouldnot invest in any securities referred to in this announcement except on thebasis of information contained in the Memorandum. Any invitation to thoseentitled to subscribe for shares in Kiliaro is made solely through theMemorandum which Kiliaro estimates to publish on or about April 4, 2023.
This press release orinformation herein may not, in whole or partly, be released, published ordistributed, directly or indirectly, in or into Australia, Belarus, Canada,Hong Kong, Japan, New Zealand, Russia, Singapore, South Africa, South Korea,Switzerland or the United States or any other jurisdiction where such action iswholly or partially subject to legal restrictions or where such action wouldrequire additional prospectuses, registrations or other actions in addition towhat is required pursuant to Swedish law. Nor may the information in this pressrelease be forwarded, reproduced or disclosed in a manner that contravenes suchrestrictions or would entail such requirements. Failure to comply with thisinstruction may result in a violation of applicable securities laws.
No subscription rights, BTA(paid subscribed shares) or new shares have or will be registered under theUnited States Securities Act of 1933 (the “Securities Act”) or securities legislationin any state or other jurisdiction in the United States and may not be offered,subscribed, used, pledged, sold, resold, allotted, delivered or transferred,directly or indirectly, into or within the United States, other than pursuantto an exemption from, or in a transaction that is subject to, the registrationrequirements of the Securities Act. Furthermore, the securities mentioned inthis press release have not been registered and will not be registered underany applicable securities law in Australia, Belarus, Canada, Hong Kong, Japan,New Zealand, Russia, Singapore, South Africa, South Korea or Switzerland andmay, with certain exceptions, not be offered or sold within, or on behalf of aperson or for the benefit of a person who is registered in, these countries orany other jurisdiction in which the release, distribution or publication wouldbe unlawful or require registration or any other measure. The Company has notmade an offer to the public to subscribe for or acquire the securitiesmentioned in this press release in any jurisdiction other than in Sweden.
In the EEA Member States, withthe exception of Sweden, (each such EEA Member State, a “Relevant State“), thispress release and the information contained herein are intended only for anddirected to qualified investors as defined in the Prospectus Regulation. Thesecurities mentioned in this press release are not intended to be offered tothe public in any Relevant State and are only available to qualified investorsexcept in accordance with exceptions in the Prospectus Regulation. Persons inany Relevant State who are not qualified investors should not take any actionsbased on this press release, nor rely on it.
In the United Kingdom, thisannouncement and any other materials in relation to the securities describedherein is only being distributed to, and is only directed at, and anyinvestment or investment activity to which this document relates is availableonly to, and will be engaged in only with, “qualified investors” (within themeaning of the United Kingdom version of the EU Prospectus Regulation(2017/1129/EU) which is part of United Kingdom law by virtue of the EuropeanUnion (Withdrawal) Act 2018) who (i) have professional experience in mattersrelating to investments which fall within Article 19(5) of the FinancialServices and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the“Order“),(ii) are persons falling within Article 49(2)(a) to (d) (“high net worthcompanies, unincorporated associations etc.”) of the Order, (iii) are outsidethe United Kingdom, or (iv) are persons to whom an invitation or inducement toengage in investment activity (within the meaning of section 21 of theFinancial Services and Markets Act 2000) in connection with the issue or saleof any securities may otherwise lawfully be communicated or caused to becommunicated (all such persons together being referred to as “relevantpersons”). This announcement is directed only at relevant persons and must notbe acted on or relied on by persons who are not relevant persons. Anyinvestment or investment activity to which this announcement relates isavailable only to relevant persons and will be engaged in only with relevantpersons.
Forward-lookingstatements
This announcement containscertain forward-looking statements that are based on uncertainty, as theyrelate to events and depend on circumstances that will occur in the future andwhich, by their nature, may have an impact on results of operations and thefinancial condition of Kiliaro. Such forward-looking statements reflectKiliaro’s current expectations and are based on the information currentlyavailable. Kiliaro cannot give any assurance as to whether such forward-lookingstatements will prove to be correct. There are a number of factors that couldcause actual results and developments to differ materially from those expressedor implied by these forward-looking statements.
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION,DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES OF AMERICA, AUSTRALIA,BELARUS, CANADA, HONG KONG, JAPAN, NEW ZEALAND, RUSSIA, SINGAPORE, SOUTHAFRICA, SOUTH KOREA, SWITZERLAND OR ANY OTHER JURISDICTION IN WHICH THERELEASE, DISTRIBUTION OR PUBLICATION WOULD BE UNLAWFUL OR REQUIRE REGISTRATIONOR ANY OTHER MEASURE.