(Alliance News) - The boards of directors of LVenture Group Spa and Digital Magics Spa announced Friday that they have mandated LVG CEO Luigi Capello and DM executive chairman Marco Gay, respectively, to sign a non-binding term-sheet concerning the integration of the two companies, which is expected to be achieved through the merger by incorporation of DM into LVG.

In light of the context of high development of the venture capital sector, "the transaction is aimed at creating a leading operator in the domestic market and which assumes relevance - in terms of size and characteristics - on the European scene, opening up a spectrum of opportunities to development also internationally," a joint note reads.

According to the preliminary understandings reached, which are subject to further deepening and verification on the basis of mutual due diligence as well as the realization of corporate transactions functional, inter alia, to increase LVG's equity, it is expected that the business combination can be realized on the basis of an exchange ratio based on a valuation of, respectively, DM and LV - in terms of contribution in the combined entity - within the range of 61.5 percent - 38.5 percent / 66.5 percent - 33.5 percent, the companies specify.

The term-sheet outlines a hypothetical structure of the combined entity's corporate governance structure designed to reflect the enhancement ratio, specifically envisioning that DM's current executive chairman, Marco Gay, will assume the role of executive chairman and LVG's current chief executive officer, Luigi Capello, will serve as chief executive officer.

LVG CEO Luigi Capello commented, "The deal lays the groundwork for the creation of one of Europe's leading early-stage Venture Capital operators and, at the threshold of our 10-year anniversary, aims to further enhance the commitment of the partners, including Luiss University and CPI, and our partners, rewarding the great work done by the LVenture Group team. We are convinced that in order to seize the great opportunities of a booming market such as the Venture Capital market, we need to increase in size to be internationally competitive and more attractive, both to investors and to the best startups. This integration reinforces our vision, which is to create the new Italian entrepreneurial fabric, generating value for investors and for the country system."

DM Executive Chairman Marco Gay commented, "At Digital Magics we have always been convinced that in order to grow we need to work as a system. We have great challenges and opportunities to seize in an industry that is increasingly concretely demonstrating its ability to grow, create value and compete internationally. With the operation that we are starting today we want to enhance 20 years of Digital Magics' history by creating the basis to continue on a path of further strong dynamism, thanks to the great ability of the management and the entire team and the support of our historical partners, such as Tamburi Investment Partners and Luiss Guido Carli University, who believe in us, and the work we are carrying out with the business plan."

On Friday, LVenture Group closed 2.2 percent in the red at EUR0.35 per share while Digital Magics' stock ended up 2.4 percent at EUR3.40 per share.

By Chiara Bruschi, Alliance News reporter

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