# OnTheMarket exercises option to acquire the 80% of Glanty Ltd it does not currently own

- Link: https://www.directorstalkinterviews.com/onthemarket-exercises-option-to-acquire-the-80-of-glanty-ltd-it-does-not-currently-own/412970352
- Published: 2021-03-22T07:10:00+00:00
- Author: Giles

**OnTheMarket plc**, (LON:OTMP) the majority agent-owned company which operates 
the OnTheMarket.com property portal, is pleased to announce that it has exercised
its call option to acquire the 80% of Glanty Ltd that it does not currently own.

The acquisition is expected to allow the Company:

·      to integrate Glanty’s products and services into the OnTheMarket platform;

·      develop its product offering to benefit and drive engagement with estate 
agents, housebuilders and consumers; and

·      feature “best in class” products and platforms across the entire property
marketplace.

**About Glanty**

Glanty is a property technology (“prop-tech”) business which specialises in providing
solutions to the UK residential estate and lettings sectors.

It is the owner and developer of software products and services designed to reduce
overheads, maximise efficiencies and increase revenues for estate and lettings agents.
At the time of OnTheMarket’s investment in December 2019, Glanty’s primary product
was “teclet”, an automated portal for the lettings industry which manages the lettings
process end-to-end, from the creation of a tenancy through to its management to 
renewal. In the period since that investment, revenue from sales of “teclet” has
increased as its customer base has continued to grow and further new products offering
similar efficiency savings for the estate agency sector have been developed. This
includes a range of API partnerships which are expected to accelerate OnTheMarket’s
digital commerce strategies, offering agents the opportunity to earn income by directly
presenting buyers, sellers, tenants and landlords products and services that they
can purchase at appropriate points in their property journey.

Glanty’s revenues grew by 76% in the year to 31 December 2020 to £876k (2019: £497k).
It made a loss after tax of £172k (2019: £802k) and had assets (excluding cash) 
of £2.7m at 31 December 2020. Net assets at that date were £785k. OnTheMarket expects
Glanty may require some limited investment in the immediate short term, as it seeks
to further develop its products and services.

**Completion arrangements**

Upon completion of the call option, OnTheMarket will enter into a share purchase
agreement pursuant to which it will acquire the remaining shares in Glanty for an
initial consideration of approximately £1.5 million (on a cash and debt free basis,
subject to adjustment, and payable in cash or shares at OnTheMarket’s option, currently
expected to be in shares) plus a revenue and EBITDA^(1) based earnout arrangement.
OnTheMarket will also be required to repay shareholder loans of approximately £1.4
million on completion. The earnout arrangement could result in maximum deferred 
consideration of up to £12 million (payable in cash or shares at OnTheMarket’s discretion)
and shall be payable if certain revenue and EBITDA targets are met by Glanty.

The earnout targets are based on Glanty’s recurring revenues and EBITDA in the third
year post completion, the mechanism for determining which is detailed in the share
purchase agreement. The earnout will be payable if third year revenues exceed £2m
and third year EBITDA exceeds £0.5m. Below those levels, no earnout is paid. If 
payable, the earnout payable will be 1 times third year revenues plus 1.5 times 
third year EBITDA, capped at an aggregate payment of £12m. Payment of any earnout
will be made following the third anniversary of completion of the call option and
allows time for drawing up and agreeing the relevant accounts on which the earnout
is calculated.

In the event that the approximately £1.5m consideration payable on completion of
the call option is to be satisfied by the issue by OnTheMarket of consideration 
shares, the majority of shares issued in respect of the £1.5m consideration payment
will be subject to lock-in arrangements which restrict their sale save in limited
circumstances for either 3 or 4 years post completion of the call option (4 years
for certain sellers actively involved in the business). There is then an orderly
market arrangement in place in each case for a further 12 months thereafter.

Completion of the call option is subject, inter alia, to the satisfaction of certain
conditions and is scheduled for 28 May 2021.

> **Jason Tebb, Chief Executive Officer of OnTheMarket, commented:**
> “Since I joined the Group in December 2020, the team and I have built an ambitious
> roadmap of product and service innovations for the next 12 months.  This is focused
> on a holistic approach to deliver rich engagement and functionality for users 
> and provide them with more reasons to return to us regularly.”
> “As part of our strategy, we’ll be integrating Glanty’s products into our offering,
> to create even better value for residential sales agents, lettings agents and 
> housebuilders. By building tools that will assist them in gaining a competitive
> edge we will support increased efficiencies within their businesses, providing
> them with best-in-class software.”
> “I very much look forward to working with the Glanty management team, who bring
> a wealth of experience and will add further industry and technology expertise 
> to OnTheMarket. Exercising this option with Glanty provides us with the building
> blocks to accelerate our development roadmap and roll-out new functionality, supporting
> our vision for further growth and innovation for the business.”

Notes

1)   EBITDA is defined as operating profit before finance costs, taxation, depreciation,
amortisation, and non-recurring items. The bases of calculation of Glanty’s revenues
and EBITDA for the purposes of determining any earnout payment are set out in the
SPA and allow for adjustments in certain circumstances.

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