Shares in online bingo company Stride Gaming (LSE: STR) have soared by over 10% today after the company announced a $39m deal to acquire sector peer, InfiApps. Clearly, investors are bullish on the move which gives Stride Gaming a substantial presence in the social gaming industry across North America and Australia. The deal will be made up solely of cash, with it being funded through existing cash resources as well as a loan of around $12m from one of Stride’s shareholders, Poppy Investments.
The deal fits in with Stride Gaming’s strategy of seeking out multiple small online gaming companies and, since it listed on the stock market in May 2015, its share price has now soared by almost 50%. And, with it continuing to diversify its brands and take advantage of appealing valuations across the sector due to increasing regulation, Stride Gaming could continue to be a strong performer over the medium term.
Also announcing an acquisition today is energy procurement business Inspired Energy (LSE: INSE). It has paid £2.75m for Blackpool-based Wholesale Energy, with the deal being made up of £1.5m in cash plus a further £0.5m in shares that will be crated by a placing that has also been announced today. And, should Wholesale Energy meet specific targets, a further £0.75m will be paid in future.
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The deal has been positively received by the market, with Inspired Energy’s share price rising by 4% and, with the acquisition adding service specialism and increasing Inspired Energy’s customer base, it is likely to have a positive impact on its financial performance. In fact, Inspired Energy is forecast to increase its earnings by as much as 11% next year and, with its shares trading on a price to earnings (P/E) ratio of 12.6, it appears to offer good value for money – especially since it has a strong track record of profit growth in recent years.
Meanwhile, e-learning services provider Learning Technologies (LSE: LTG) has also announced an acquisition today, with it buying Eukleia Training for £7.5m, with £6m to be paid in cash and £1.5m in shares. As such, Learning Technologies will conduct a £7.5m placing, with the surplus capital to be used for future acquisitions.
Although shares in Learning Technologies have fallen by 3% today, the deal seems to make sense for the company. That’s because it provides Learning Technologies with additional scale and exposure to the government, risk and compliance marketplace, which is very much a growth market. And, with Learning Technologies forecast to increase its bottom line by 16% in the current year and by a further 17% next year, investor sentiment could be positively catalysed in the short to medium term.
That’s especially the case since the stock still trades on a price to earnings growth (PEG) ratio of 1.6, which indicates that there is substantial scope for capital gains in future.
