Productive Business Solutions Limited (PBS) has entered into a share-purchase agreement to acquire 100 per cent of Infotrans Group Holding BV in a transaction which is set to be completed by June 30.
While the transaction is subject to regulatory approvals and other customary closing conditions, the deal will result in PBS earning US$330 million in annualised revenue while expanding its footprint from 19 countries and territories to 21.
"Infotrans has long been a leader in the technology industry in the Dutch Caribbean and has built a growing business in Colombia serving the BPO sector. Integrating Infotrans into PBS will allow us to better serve our customers in these key markets and give us new technical capabilities," PBS CEO Pedro Paris stated in a Jamaica Stock Exchange (JSE) disclosure.
When asked about how the acquisition will be funded, Paris explained that it will be funded largely from the perpetual cumulative redeemable preference shares, with part of the payments to be paid on a contingent basis. PBS closed its preference share offer last September after raising US$15 million and $500 million (US$3.33 million) at interest rates of 9.25 per cent and 10.50 per cent, respectively.
Infotrans is a full-service information, communications and technology (ICT) company formed in 1990 that serves the Dutch Caribbean and South America with operations in the ABC islands (Aruba, Bonaire, and Curaçao), Saint Martin, Suriname, Colombia, and Guyana. PBS already has a presence in Suriname and Guyana, but not in a material way as in the Dutch Caribbean and other markets.
"Infotrans will make our operations in the Dutch Caribbean region more complete. The main source of income in that region for us is the printing business and Infotrans is more IT. We'll have a better portfolio and we have future plans that will be interesting when we unite the two," Paris informed the Jamaica Observer last Friday following the disclosure.
Infotrans currently has more than 500 customers and represents 14 global brands in that part of the region. It has more than 200 employees with more than 40 engineers working on cyber security, networking, data centre, business continuity, communications, and collaboration services. This is on top of the ICT solutions and consultancy services it provides to its clientele.
Infotrans CEO Arjen G van der Meulen said in the disclosure, "I am pleased to combine Infotrans with PBS and have every confidence that the acquisition will build on Infotrans' long track record of providing exceptional service to clients."
The Curaçao Commerce Register shows that Infotrans Group Holding was formed in 2016 with 100 shares that have a nominal value of 100 Antillean Guilder. Other subsidiaries with the Infotrans name included Infotrans & Co, CV; Infotrans Caribbean International BV; Infotrans Caribbean NV; and Infotrans Distribution BV.
"We have a presence in Colombia, and we see a lot of potential for growth. Infotrans has an important client base, and we think that with their brand, talent and some of our finance muscle, we can grow that operation there in a very interesting way," Paris shared, regarding growth potential in the South American country.
This is PBS's second major acquisition in the last two years following its acquisition of PBS Technology Group Limited in September 2021 for US$54 million.
PBS's consolidated revenue grew by 41 per cent to US$316.15 million (J$48.05 billion) with its consolidated net profit rising by 50 per cent to US$8.37 million. Net profit attributable to shareholders was US$8.30 million with earnings per share at US$0.0446. Its earning before tax, depreciation and amortisation (EBITDA) was 44 per cent higher at US$45.95 million.
The result exceeds PBS' projected US$300 million in revenue and US$45 million in EBITDA from its prospectus, but misses the US$10 million in projected consolidated net profit for 2022. PBS's audited financials are due by March 31.
"All countries did great last year. We grew in 17 out of 19 markets and we grew in an organic way. It was pretty balanced in Central America and the Caribbean," Paris commented on growth in 2022.
Despite the 14 per cent growth achieved in revenue to US$89.81 million in the fourth quarter, PBS's gross profit slid 15 per cent to US$25.55 million. The PBS CEO attributed the increased cost of sales to the mix of products sold in the prior year with the fourth quarter being heavily skewed compared to 2022 which was more balanced.
In spite of that slip, with net profit coming in 48 per cent lower at US$4.05 million, December 2022 was the company's second-best performing December period, from a sales perspective, in its 21-year history.
"Perhaps, governments on the occasion did some strategic investments after COVID. In general terms, I don't see signals from the market that business is slowing down. We're hiring and retaining people to protect our client services. There are a lot of clients who are investing as well. The governments want to achieve certain goals and they consider PBS a good partner to work with," stated Paris on the company's expectations amid recessionary talks.
He is currently projecting the company will achieve US$50 million in EBITDA and US$12 million in consolidated net profit, driven by the company's business with governments on transformational projects and increased activity with its growing partners — Alphabet, Oracle and NCR.
PBS is also set to move into the ninth floor of Unit 1 at 53 Half-Way-Tree Road (53HWT) once the 10-storey development is complete. 53HWT is controlled by Stanley Motta Limited, which is spending US$12 million on the new Unit 1 property which is under construction as of January.
PBS's total assets are up 13 per cent to US$379.40 million with cash and cash equivalents of US$31.24 million and non-current assets of US$163.56 million. Total liabilities increased eight per cent to US$273.81 million as trade payables nearly doubled to US$84.62 million. Equity attributable to shareholders closed the period up 26 per cent due to the perpetual preference shares having no fixed maturity date.
PBS's stock price slid 14 per cent on Monday to US$1.89 which leaves it up five per cent year to date and a market capitalization of US$351.94 million. Its top 10 shareholders, executives and directors own 98.9 per cent of the ordinary shares. General Accident Insurance Company Jamaica Limited purchased 612,721 shares from former regional CEO Ian John earlier in the year. Its three preference shares are all trading at premiums — above their listing/par value.
"The name of the game for us is activity, and we translate it into outstanding performance. We have unique differentiators in certain cases, and we have our portfolio of brands moving. We have to have the capability for a lot of reasons to accurately predict what's happening with the company," Paris said.