I might be suffering from confirmation biases here, but I think it is a fairly good deal.
Here is why?
For the Base Case Acquisition Cost (Profits of all 3 entities do not experience more than 25% earning growth yearly for the next 3 years till 2020 ), the acquisition will be done purely through the issue of new shares. Hence there is no strain on the cash of silverlake axis, neither will it need to takes on loan for this acquisition.
New shares issued is cents 71cents, a premium of about 17% over the last traded price of 60 cents.
The acquisition cost is 50 mio, and hence will result in a dilution of shares by less than 3%. If we assume zero profits growth, the 3 entities will add about 14% of 2017 NPAT. Hence it is yield acretive.
Even if profits collective is halved, it will still be acretive. However, 2017 is a low base for NPAT. If we assume 30% more profits as reversion to the mean, and the 3 entities' profits to halved, it would still be accretive.
With the exception of SDE, of current ratio of about 1.3, the other 2 entities have current ratio above 2.
Now, the confusing part is when Earn-Out consideration comes into the picture.
Maximum dilution is 25%. For that to happen, the NPAT will amount to about 110 mio (RM), that is about 70% of 2017 NPAT. (Operating, excluding sale of GIT)
The problem is the qualitative part.
The customers of SDE and SDS are also renowned banks around the world, just google them.
I gave just 2 examples here.
There is simply not enough information to calculate possible growth, although the news from the SDE website does show a rather high profile type of corporate actions, e.g. digital bank at sri lanka launched by PM.
I do like the deal in general. How about you? Maybe we would know what Mr Market thinks come Monday. Personally, I think there is more good things to write about it by analysts than bad. Given that the US market is still on a roll, if Mr Market gives the deal a thumbdown, there is no excuse to blame it on market sentiments