New Zealand amphibious boatmaker Sealegs is plunging into the European and South African markets, taking controlling interests in two companies in cash and script deals worth $5.3 million.
If the deal goes ahead, boat production will rise to more than 400 per year, with operations based in Auckland, Gemini Marine in Cape Town and Sillinger in Paris.
The proposed purchases include a name change for Sealegs to Future Mobility Solutions Ltd and listing on a European stock exchange as a more convenient time zone for two companies, with an eye to increase the investor base.
Both deals are conditional and are subject to due diligence, regulatory approvals and shareholder agreements.
Shares in Sealegs were up almost 9% to 10c following the announcement, albeit on low volumes.
Sealegs chairman Eric Series said the announcement was ''an exciting new chapter for the company''.
''These first acquisitions will immediately accelerate our vision to become a mobility solutions orientated group which is dynamically expanding into new markets, new territories and new products, including drones and sea structures,'' he said in a statement.
The 1.5 million cash component for Sillinger, would come from internal cash resources plus the proceeds of a placement of new Sealegs shares.
Craigs Investment Partners broker Peter McIntyre said Sealegs would get a boost in sales of its amphibious system and exposure to new markets.
''It's a merger of three into one, giving more scale and, hopefully, profitability.''
However, he sounded a cautionary note about New Zealand companies heading offshore, where they will be operating in foreign regulatory jurisdictions, and must maintain control and direction of the two overseas divisions.
He said Sealegs had 133 million shares on issue and the issuances for Gemini Marine and Sillinger could become dilutionary, but Sealegs could consolidate shares in the future.
For Gemini and Sillinger to have accepted part payments in shares valued at 25c when shares were trading below 10c, they had to have seen ''plenty of value'' in the proposal, Mr McIntyre said.
He believed the combined turnover of the three divisions was as yet too small for a European listing.
Sealegs' board said the European listing would be ''within the next two years'' and would support Sealegs' development.
At present, the majority of Sealegs' issued capital is held by overseas investors.
Mr Series described the brands of Sillinger and Gemini as highly respected and world leaders in their field. Both were strong in the military and defence sectors and had a wide customer base with government, and commercial organisations.
Sealeg's board said the companies had a ''compelling complementary geographic footprint'', given Gemini's strength in southern Africa, the Indian Ocean and the UK and Sillinger's primary focus on the French, European and North and West African market.
Sealegs' particular strength was in the Asia Pacific markets, the board said.
