All of Bricknode’s operational assets to be acquired by Huddlestock Fintech AS (OSE: HUDL)
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Bricknode Holding AB (publ) (“Bricknode” or the “Company”) and Huddlestock Fintech AS (“Huddlestock”) have today entered into a purchase agreement (the “Agreement”) regarding a transfer of all operational assets of Bricknode to Huddlestock in exchange for 41,138,911 consideration shares in Huddlestock, with a value of approx. SEK 107 million1 (the “Transaction”). Completion of the Transaction is conditional upon, among other things, approval by a general meeting of Bricknode. The consideration shares will be issued in three separate and subsequent tranches with the first tranche issued on completion of the Transaction and the subsequent tranches expected to be issued no later than during the first six months of 2024. The Company’s current intention is to distribute the majority of the consideration shares to its shareholders without undue delay following receipt of each tranche.
The acquisition is a strategic move for both companies with Bricknode’s investment operations software and technology combining with Huddlestock’s trading technology and investment banking licence to create a leader in wealthtech solutions. Together with Huddlestock, Bricknode forms a strong group of companies with over SEK 80 million in annual revenue on a pro forma basis (based on FY2022 figures). The Transaction is expected to generate significant cost synergies and an accelerated revenue growth from both upselling opportunities amongst the combined customer base and an expanded target market with the complete end-to-end solution.
“Huddlestock’s vision is to democratise the financial industry, and by including Bricknode in the Huddlestock Group, we can support digitalisation of the financial industry even better. The two companies complement each other perfectly with Huddlestock having strong trading technology, access to global markets and an investment banking licence, whereas Bricknode contributes proven back-office technology, operational services, front-end user interfaces along with a highly competent team,” said John E. Skajem, CEO of Huddlestock.
“We are very excited to join forces with Huddlestock where our extensive product portfolio and domain knowledge will be put to use at great scale. In the 13 years Bricknode has been operating, we have invested over SEK 110 million in our technology and created an ecosystem of financial applications. All our software is cloud-native, which gives us unparalleled speed and scalability. Bricknode and Huddlestock have synergies and we are looking forward to working together in creating a unique European fintech company,” said Stefan Willebrand, Founder and co-CEO of Bricknode.
"This announced transaction offers Bricknode an excellent opportunity to scale up its business. I am pleased for Bricknode shareholders being offered the chance to participate in this promising journey," said Robert Lempka, Chairman of Bricknode.
The Transaction in brief
The Transaction will be carried out through a sale of 100% of the shares in Bricknode Software AB, Bricknode Platform AB and Bricknode Ltd (collectively the "Subsidiaries") to Huddlestock for a total consideration of 41,138,911 shares in Huddlestock, provided that the Subsidiaries have a total net cash position of SEK 4 million as of 2023-04-01.
The Transaction is subject to approval of a general meeting in Bricknode. Shareholders in Bricknode representing approx. 68% of the shares and votes have committed to vote in favor of the approval of the Transaction at the extraordinary general meeting, which is expected to be held on 31 March 2023. Provided that the extraordinary general meeting resolves to approve the Transaction, it is expected to be completed during April 2023.
The consideration of 41,138,911 shares in Huddlestock corresponds to a value of the Subsidiaries of approx. NOK 106,961,169 (or approx. SEK 107 million based on a reference price of NOK 2.60 per share in Huddlestock and a NOK/SEK exchange rate of 1:12).
The consideration shares will be issued in three separate and subsequent tranches in order for the Company not to hold more than 9.9% of the capital or votes in Huddlestock on each occasion, which would trigger a need for regulatory filings and approvals. The total number of consideration shares corresponds to approx. 21.3% of the total number of shares and votes in Huddlestock.
The issue of the first tranche of 19,000,000 consideration shares in Huddlestock will take place on completion of the Transaction ("Closing"), which is expected to occur in April 2023. The Company intends to use the consideration shares received, and/or the proceeds from the sale of such shares, to repay lenders and finance the operations of the Company. The current outstanding loans, including accrued interest, amount to approx. SEK 9.6 million and the Company intends to loan an additional SEK 5.3 million in order to capitalize the Subsidiaries and to fund the Company’s operations. The operational costs of the Company amount to approx. SEK 60,000–80,000 per month. Consideration shares received in the first tranche which are not used for these purposes are intended to be distributed to the Company’s shareholders during 2023. However, no resolutions to distribute consideration shares have been made and any future resolutions will have to be passed on separate general meetings to be held after Closing.
When the Company has transferred the consideration shares in Huddlestock received in the first tranche (e.g., through sales or distributions), the Company will request the issue of a second tranche of 19,000,000 additional consideration shares in Huddlestock, which will be delivered to the Company no later than three weeks after such request. It is the Company’s intention that these consideration shares will be distributed to the shareholders of the Company, provided however that any such distribution will need to be resolved upon by a separate general meeting.
When the Company has transferred the consideration shares in Huddlestock received in the second tranche, the Company will request the issue of the final third tranche of 3,138,911 additional consideration shares in Huddlestock, which will be delivered no later than three weeks after such request. It is the Company’s intention that these consideration shares will be distributed to the shareholders of the Company, provided however that any such distribution will need to be resolved upon by a separate general meeting.
The Company estimates that the consideration shares received in the second and third tranches can be distributed to the Company’s shareholders no later than during the first half of 2024. The distributions are intended to be made through redemption offers to the Company’s shareholders or similar distributions.
The current intention is to finally liquidate Bricknode once material assets are distributed to shareholders, which entails a delisting of the Company. The board may also assess the possibility to carry out a reversed takeover, whereby an unlisted company acquires Bricknode’s listing at First North Growth Market.
Rationale of the Transaction
Bricknode has continuously evaluated various strategic and structural alternatives to drive growth and maximize shareholder value. In the year-end report for 2022, the Company communicated the large gap that exists between the scope and breadth of the product portfolio in relation to the size of the Company's revenues. In 2022, the Company launched an initiative to establish its own securities company in order to grow revenues and margins more quickly. In line with the fact that access to capital in the market has deteriorated and the personnel resources have been reduced during Q4 2022, the conditions for capitalizing and running its own securities company in the near term have also been reduced. In the Company's evaluation of strategic alternatives, it has therefore been important to find a party that shares the Company's vision and owns securities companies, which Huddlestock does.
Furthermore, Huddlestock has financial software in areas that Bricknode does not, such as real-time trading of equities. Bricknode's and Huddlestock's product portfolios complement each other effectively and together the companies have identified significant synergies and growth opportunities with a fast time to market.
The board of directors assesses that the Transaction enables continued expansion and increased use of the significant product portfolio that the Company has established and creates significant value for Bricknode’s and Huddlestock’s shareholders.
Due diligence
Before entering into the Agreement, Huddlestock performed a customary due diligence investigation (including financial, legal, commercial, technical and tax analysis) of the Subsidiaries. No information that has not previously been made public and that could constitute inside information in relation to Bricknode has been provided in the due diligence investigation. The Agreement contains customary guarantees and commitments from the Company regarding the Subsidiaries.
For more information regarding the Transaction, please refer to the information brochure regarding the Transaction which will be made available on Bricknode’s website (www.bricknode.com) no later than on 17 March 2023.
Indicative timetable for the Transaction
| Extraordinary general meeting in Bricknode | Friday, 31 March 2023 |
| Closing of the Transaction and issue of the first tranche of consideration shares | During April 2023 |
| Distribution of certain of the consideration shares in the first tranche to the Company’s shareholders | During 2023 (estimate) |
| Issues of the second and third tranches of consideration shares and distribution of such shares to the Company’s shareholders | Finalised during H1 2024 (estimate) |
Huddlestock in brief
Huddlestock is a provider of innovative technology and professional investor services. In 2022, the Huddlestock Group delivered consolidated revenues of NOK 46.1 million, +97% YoY, after including F5 IT since acquisition 1 May 2022. The EBITDA was NOK -14.0 million, as the group is scaling up the organization and continuing to invest in their technology suite, adding talent and preparing for growth in future client deliveries. Pro forma revenues for the full year of 2022 were NOK 61.6 million +48% YoY. Huddlestock’s shares are listed on Euronext Growth Oslo.
Description of Bricknode and the Subsidiaries in brief
The Bricknode group was founded in 2010 with the purpose to help financial institutions, both established and startups, to digitalize businesses through automation and optimization of internal processes. The Subsidiaries have developed a scalable cloud-based platform for financial operations focused on investments and lending activities. The Subsidiaries offer its technology to customers through two types of services. The first is a pure Software as a Service and the other is a complete B2B Brokerage service.
Bricknode’s shares are listed on First North Stockholm.
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1NOK 106,961,169, based on a reference price of NOK 2.60 per share in Huddlestock and a NOK/SEK exchange rate of 1:1.
2The closing rate on the spot market on 2023-03-14 has been used as exchange rate.
Contacts
Bricknode
Stefan Willebrand, Founder & co-CEO
+46 8 122 086 87
Certified Adviser
Amudova AB
+46 8 546 017 58
About Bricknode
Bricknode is a B2B-focused SaaS company that provides scalable, cloud-based software enabling financial companies to launch digital banking products at speed. The platform makes it easy for customers to build or transform almost any financial product with complete software for investment management, funds, and lending. The company also offers outsourcing solutions for back-office administration. Bricknode was founded in 2010 and supports financial companies globally. Find out more at bricknode.com or follow Bricknode on LinkedIn & Twitter.
This press release contains inside information that Bricknode Holding AB (publ) is required to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication by the above contact person on 15 March 2023 at 08.30 CET.
Important information
This press release does not constitute an offer to sell or a solicitation of any offer to purchase any securities. This press release is not a prospectus and it has not been approved by any regulatory authority in any jurisdiction. Any decision to invest in securities referred to in this press release must be made on the basis of all publicly available information relating to Bricknode and the securities. The information in this press release does not purport to be complete. No reliance may be placed for any purpose on the information in this press release or its accuracy or completeness. This press release does not purport to identify or suggest the risks (direct or indirect) which may be associated with an investment in Bricknode or its securities. This announcement is not being made in and copies of it may not be released, distributed or published or sent into the United States, the United Kingdom, Canada, Australia, South Africa or Japan or any other jurisdiction in which the release, distribution or publication would be unlawful or require registration or any other measure in accordance with applicable law. The securities referred to in this press release have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any U.S. state securities laws and may not be offered or sold in the United States absent registration or an exemption from registration thereunder. Bricknode does not intend to register any of the securities in the United States or to conduct a public offering of the securities in the United States. The securities referred to in this press release have not been and will not be registered under the applicable securities laws of Canada, Australia, South Africa or Japan and, subject to certain exemptions, may not be offered or sold in or into or for the account or benefit of any person having a registered address in, or located or resident in, Canada, Australia, South Africa or Japan. There will be no public offering of the securities described herein in Canada, Australia, South Africa or Japan. This press release are only addressed to and directed at persons in member states of the European Economic Area (the “EEA”) who are “Qualified Investors” within the meaning of Article 2 (e) of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 (the “Prospectus Regulation”). The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with Qualified Investors. This press release does not constitute an offer of securities to the public in the United Kingdom. No prospectus has been or will be approved in the United Kingdom in respect of the securities. In the United Kingdom, this communication is being distributed to and is directed only at “Qualified Investors” within the meaning of Article 2 (e) of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 as it forms part of domestic law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (the “EUWA”) (the “UK Prospectus Regulation”), who are (i) investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “Relevant Persons”). Any investment activity to which this communication relates will only be available to and will only be engaged with, Relevant Persons. Any person who is not a Relevant Person should not act or rely on this document or any of its contents.
Forward-looking statements
This press release contains forward-looking statements that reflect Bricknode’s intentions, beliefs, or current expectations about and targets for Bricknode’s and Huddlestock’s future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which Bricknode and Huddlestock operate. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe”, “expect”, “anticipate”, “intend”, “may”, “plan”, “estimate”, “will”, “should”, “could”, “aim” or “might”, or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Bricknode believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. Bricknode does not guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors and readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither Bricknode nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release.