Simmons Report summary of positive and negative aspects of the merger:
"In summary, the positive aspects of the Task Merger are:
• the strategic rationale for the Task Merger is compelling. The Task Merger will be transformational for the Company, moving it from being a customer engagement solution heavily reliant on one client (McDonald’s) to being an end-to-end cloud engagement and transaction platform provider used by a number of major hospitality and retail enterprises. The transaction will result in the diversification of Plexure’s customer base, an expanded product portfolio for both companies and cross-selling opportunities
• the terms of the Task Merger are reasonable:
− the Purchase Price of A$120million is reasonable based on our assessment of the value of Task
− the issue price of $0.60 per share under the Task Allotment is fair to the Current Shareholders. The issue price of $0.60 represents a premium of 11% to the closing share price of $0.54 on 13 August 2021 (the last trading day before the announcement of the Task Merger) and equates to Plexure’s volume weighted average share price (VWAP) over the month to 13 August 2021
− the 137,141,858 Consideration Shares issued to the Task Shareholders and Latimer Partners are subject to a 2 year restricted transfer period under the Task Lock-up
− the conditions and warranties set out in the Merger Agreement are in line with market practice for transactions of this nature and are not unreasonable
• there is unlikely to be any material transfer of value from the Current Shareholders to the Task Associates under the Task Merger as we consider the Acquisition Price to be reasonable and the issue price of the Consideration Shares to be fair
• the Task Merger will have a positive impact on the Company's financial position. The Company’s revenue and profitability will increase significantly, as will the size of the Company on a total assets and net assets basis
• the Task Associates will have a strong degree of influence over the Company:
− their collective (most likely) 42.30% shareholding / (maximum) 47.41% shareholding will be able to singlehandedly block special resolutions and strongly influence the outcome of ordinary resolutions
− they will have 2 representatives on the Company’s 7 member Board
− Task’s chief executive officer Daniel Houden will be appointed chief
executive officer of Plexure
• the Company’s shares may be re-rated by the market, which may improve the liquidity of the shares
• given that the Consideration Shares issue price of $0.60 is at an 11% premium to the closing price on 13 August 2021 and is in line with the one month VWAP and taking into account the size of the Task Allotment and the Capital Raise, we are of the view that any impact of the Task Merger on the Company’s share price is more likely to be positive than negative
• the attraction of Plexure as a takeover target may increase as the Company will potentially have a higher profile following the Task Merger and may be more visible and attractive to potential investors
• the implication of any of the Task Resolutions not being approved by the Current Shareholders is that the Task Merger will not proceed. Plexure will remain as a mobile engagement software company heavily reliant on one customer (McDonald’s) and no capital will be raised under the Capital Raise.
In summary, the negative aspects of the Task Merger are:
• the risk profile of Plexure will broaden to some degree from just the risks associated with a business operating in the mobile engagement sector to the wider range of risks associated with the end-to-end transaction management sector
• the dilutionary impact of the Task Allotment and the Capital Raise on the Current Shareholders will result in their current collective interests in the Company reducing by approximately 53% (if they do not participate in the Capital Raise).
In our opinion, after having regard to all relevant factors, the positive aspects of the Task Merger (including the Task Allotment) significantly outweigh the negative aspects from the perspective of the Current Shareholders."