Canadian blockchain and financial technology company CryptoGlobal Corp. agreed to be acquired by HyperBlock Technologies Corp. The consideration would be $0.74 per share, representing a total equity value of CryptoGlobal of approximately $106 million.
HyperBlock expects the acquisition to be accretive to its cash flow over the next 12-month period.
CryptoGlobal shareholders will receive 0.4229 of a HyperBlock common share for each share held. The deal price represents a 48% premium to the closing price of $0.50 of CryptoGlobal's shares on March 29, and a 31% premium to the 10-day VWAP of CryptoGlobal's shares, on the TSXV.
HyperBlock expects to issue up to approximately 60.4 million HyperBlock common shares to CryptoGlobal shareholders in connection with the deal. Upon closing of the transaction, CryptoGlobal shareholders will own approximately 25.2% of the combined company.
The closing of the acquisition remains subject to certain customary closing conditions, including approval of both companies' shareholders. HyperBlock is entitled to a termination payment of $4.0 million.
CryptoGlobal's board unanimously recommended that its shareholders vote in favour of the resolution to approve the deal. The companies aim to complete the transaction by the end of May 2018.
Following the deal closure, the combined company will operate under the name HyperBlock Technologies Corp., and will be listed on the Canadian Securities Exchange.
The combined company will have a portfolio of over 21,000 servers (miners) on 28 MW of current operating power across multiple locations in the USA and Canada.
CryptoGlobal, which is buying Blockchain Dynamics Inc. and BitCity Group, generates most of its existing revenue from mining. The company is in the process of expanding its revenue streams, through the acquisition of Blockchain Dynamics, a trading and services platform for cryptocurrencies, to include: an SaaS-based Insights platform, specialized Crypto custodial storage and trading services.
Following the combination, HyperBlock founder and industrial Cryptocurrency mining veteran Sean Walsh will become the CEO of the combined company. CryptoGlobal co-founders Rob Segal, James Millership and Blockchain Dynamics Founder Chris McGarrigle will join with Walsh to lead the combined company. Segal will also join the board of directors of the combined company.
Walsh will be the largest shareholder, owning approximately 16.7% of the combined company. Segal and Millership will collectively own approximately 9.5%.
HyperBlock, a private company focused on strategic consolidation within the North American Cryptocurrency space, recently completed the acquisition of a major US-based Crypto mining and hosting facilities.
HyperBlock currently operates a 20 MW mining facility in the North West United States, which has expansion capacity to 80 MW. CryptoGlobal currently operates across multiple facilities in Canada, representing 8 MW of power.
Hyperblock CEO Walsh said, "Combining HyperBlock's large-scale Mining-as-a-Service model with CryptoGlobal's existing mining, custodial storage and crypto trading businesses, creates a strong foundation for both organic growth and growth through acquisition."
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