Update on Noveda and Zentri Transactions
Earlier today we issued some updates on the transactions to acquire Zentri and Noveda Technologies. It’s safe to say the Zentri transaction didn’t come together like I, or many others on the team expected. But even with that, we remain really excited about our opportunity to advance existing and new business through our pipeline.
First off, the loss of Zentri came as a complete surprise, and we are clearly disappointed with the deal falling through. That said, all commercial deals involving Buddy and Zentri will move forward, and we will continue to work together to build powerful IoT solutions for our customers. While this means Zentri revenues will not be recognized in a new combined Buddy Platform, it also means there is less dilution for shareholders – some 280 million shares less. Zentri didn’t provide us with much reasoning behind their decision beyond wanting to stay independent, and we’re not aware of any other transactions or deals that have been offered to them. As I said above, we will continue our relationship as partners, just as we were prior to initiating the acquisition.
Immediately after learning Zentri wanted to terminate the deal, I called Noveda’s leadership to inform them, and they reiterated their full commitment to our deal. We had previously agreed to some minor changes to their deal, namely moving some of the payment from the backend for the deal to the front. The original terms had us paying US$250k in BUD stock as upfront consideration, now it’s a bit over 15MM shares (a little over US$1MM at current exchange rates and BUD share price), and we think that’s fair given how large Noveda’s pipeline has grown since the terms of the deal were first negotiated. It is important that shareholders understand that the total price paid for Noveda is not changing, we’re simply moving some of the payment timings around. All other aspects of the Noveda deal remain the same, and we at Buddy continue to be very excited to grow our businesses together. I’m pleased that Noveda’s leadership has confirmed they feel the same way.
I departed the US on Tuesday night fully expecting that we’d be voting on both transactions, only when I landed in Australia yesterday morning did I learn about the Zentri termination. We’ve done everything we can to mitigate this development, and in fact, the Buddy team will be visiting a customer site with the Zentri team early next week so there’s no question that “the show goes on”. Of course, this isn’t how we expected today to come together, but I continue to be very excited about the deal moving forward with Noveda, and the massive opportunity we have as a combined company. I hope this context helps explain things a bit, and the team appreciates all the interest, feedback and support for Buddy. I will absolutely address any updates and developments during our shareholder meeting next week, and invite you to stay tuned for more news and information as we continue to press forward with our goal to have as big an impact as possible in the IoT.