Buddy Platform Share Price Drops 6.32% after Trading Suspension

After being reinstated to official quotation this morning, Buddy Platform Ltd [ASX:BUD] has seen its share price fall 6.32%, to trade at 8.9 cents per share.

Buddy Platform provides IoT and cloud-based technologies and platforms to customers by providing infrastructure by which businesses can, in real time, access and analyse the data generated by connected devices.

Acquisition drops share price

Having been absent from trading since 29 January, Buddy announced the acquisition of global smart light company LIFX and a share placement to raise $18.1 million.

The acquisition seems to have spooked shareholders this morning, with the share price plummeting to 8.2 cents from yesterday’s close of 9.5 cents, before regaining some of the lost ground.

The company plans to partially fund the acquisition through a share placement at an issue price of eight cents per share — this represents a 15.8% discount to the last close price of 9.5 cents per share.

Buddy CEO David McLauchlan and Buddy Chairman Rick Borenstein will invest in the share placement, pending shareholders’ approval.

LIFX generated $38.5 million in revenues during 2018 with a loss of $3.4 million in EBITDA. LIFX is expected to reach profitability this year.

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How will this affect Buddy?

Despite the drop in share price today, the acquisition of LIFX makes sense for Buddy and could provide strong business synergies.

LIFX smart lights said its products would allow customers to report their own energy consumption from a controllable smart device.

It said 1.8 million units had been sold worldwide in the past seven years through retailers including Amazon, JB Hi-Fi, Bunnings, Officeworks, Beacon Lighting and Best Buy.

Buddy expects energy awareness will be a key driver in sales. LIFX provides Buddy with a ready-built retail channel for a consumer or home version of Buddy’s resource monitoring device, Buddy Ohm.

As the demand from both commercial and retail customers for energy monitoring solutions increases, it makes perfect sense that we look to combine our Buddy Ohm platform with a product that can be found in every building and every space in the world – lighting,’ Mr McLauchlan stated.

Buddy Ohm measures water, electricity, gas and solar energy consumption in real time and provides insights to improve efficiency in commercial buildings and offices.


Ryan Clarkson-Ledward,
For Money Morning

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