Boston, MA 09/08/2014 (wallstreetpr) – Peerless Systems Corp. (NASDAQ:PRLS) agreed to acquire 80% of the outstanding shares of Deer Valley Corporation (Deer Valley). The Company signed the Stock Purchase Agreement (SPA) with Deer Valley and Vicis Capital Master Fund (Vicis).
The SPA terms
The transaction is likely to happen prior to September 30, 2014, which is subject to certain conditions and approval such as change in control over Deer Valley, the employment agreement of some individuals and certain covenants as per the SPA. But, it does not require the approval of shareholders of both the companies.
The acquisition
As per the SPA, Peerless will acquire shares of common stock of Deer Valley in two ways:
Step 1: Peerless Systems Corp. (NASDAQ:PRLS) will acquire 12.3 million shares of Deer Valley from Vicis for $3.6 million, which represents 79.93% of the total issued and outstanding shares.
Step2: The Company will buy 126,000 outstanding shares, which represents only 0.8% of Deer Valley’s common stock, from Deer Valley for $81,900.
Acquisition benefit
Peerless Systems Corp. (NASDAQ:PRLS) pursues to acquire new business in the housing cycle for a long time. The Company found a right company at good price, which has a substantial presence across all the 14 states with a strong network of dealers, builders, developers and government agencies in the southeastern and south central region of the U.S.
Peerless’ CEO Timothy E. Brog satisfied with the acquisition of Deer Valley at a fair valuation with book value of $9.7 million as of June 28, 2014. The trailing 12 months revenue was ~$29.4 million and unadjusted EBITDA of $1.3 million for the period ended June 28, 2014.
Peerless Systems Corp. (NASDAQ:PRLS) believes that the acquisition will add value to its shareholders while considering the valuation and performance. The Company anticipates positive growth from Deer Valley, a well-positioned in the housing cycle, in the coming years with the recovery of the manufactured home industry.
