Capital Appreciation Limited (JSE:CTA) agreed to acquire Dariel Solutions Proprietary Limited from Malcolm Rabson, Gregory Vercellotti and Wayne Yan for approximately ZAR 130 million on April 24, 2023. The consideration will be settled by a combination of cash and an allotment of ordinary shares out of treasury shares. The initial aggregate purchase consideration of ZAR 85.3 million will be settled by way of - a cash payment of ZAR 46.9 million and allotment out of treasury shares of 25,243,779 CTA shares at ZAR 1.52 per share amounting to ZAR 38.4 million.

Dariel has also provided CTA with a profit warranty of ZAR 62.2 million EBIDTA for the 24 month period (a CAGR of 20%), April 1, 2023 to March 31, 2025, that, if achieved, will result in an aggregate warranty purchase consideration, which should not exceed ZAR 45.9 million. This profit warranty consideration will be settled partly in cash and partly in an allotment of shares out of treasury shares. This profit warranty consideration will be settled by way of - cash payment of ZAR 25.2 million and allotment out of treasury shares of 13,592,804 shares.

Dariel reported Net Assets of ZAR 47.8 million for year ended March 31, 2023. Dariel will form part of Capital Appreciation?s software division. The founders and directors of Dariel will remain with the business and have entered into long term executive employment agreements with Dariel Software.

The transaction is subject to the fulfilment of suspensive conditions, including approval from the Competition Commission, CTA advising Dariel in writing that it is satisfied with the results of the due diligence and no material adverse change arises or occurs between the signature date of the sale agreements and the date upon which all the suspensive conditions are fulfilled. The Board of CTA have unanimously approved the above acquisition. The rights and obligations of the sale agreements shall become unconditional and of immediate force and effect by not later than August 31, 2023.