Simply Secure Limited, a St. Lucian-based International Business Company (IBC), has significantly raised its stake in tTech Limited, a Junior Market-listed IT consulting firm, by acquiring an additional 20% of the company’s shares. This purchase propels Simply Secure’s ownership to 69.08%, compelling it to issue a mandatory takeover offer to the remaining shareholders of tTech.
On Friday, Simply Secure invested over $45 million to acquire 21.2 million ordinary shares in tTech, increasing its total holding to 73.2 million shares. The shares were bought at $2.20 each from Enqueue Inc. and Auctus Holdings Inc., both St. Lucian IBCs, owned by former tTech CEOs Norman Abraham Chen and Gordon Christopher Reckord. Following the sale, Reckord and Chen will step down from their roles as directors of tTech.
Edward “Teddy” Alexander, chairman and co-founder of tTech, expressed gratitude for the contributions of the outgoing directors, noting their role in the company’s growth. “We now look forward to the continued success driven by Simply Secure’s expanded involvement,” he said in a statement disclosed on the Jamaica Stock Exchange (JSE).
Strategic Takeover and What It Means for tTech
Simply Secure’s initial stake acquisition occurred on July 11, when the company purchased 46.7 million shares from Alexander and 5.3 million shares from Auctus Holdings, at the same price of $2.20 per share. With this strategic move, Simply Secure has now spent a total of $160.37 million (approximately US$1.01 million) to become the dominant shareholder in tTech.
The JSE rules stipulate that when any company or individual acquires more than 50% of a listed company’s voting rights, a mandatory offer must be extended to all other shareholders. This takeover offer will allow Simply Secure to purchase the remaining shares at the same price of $2.20 per share. Shareholders are not required to accept the offer but may choose to sell their shares based on the terms provided in the takeover bid circular, which will include details such as payment methods, timelines, and other crucial information.
Financial Details and Market Implications
Simply Secure’s acquisition, which now represents over 73% of tTech’s ordinary shares, is expected to trigger a shift in the company’s structure, potentially affecting its market listing. While Simply Secure is unlikely to increase its stake beyond 80%, this move ensures that tTech remains publicly listed, as the JSE requires that a minimum of 100 shareholders own at least 20% of a company’s shares to maintain its listing.
The top 10 shareholders of tTech, including Simply Secure, hold a combined 79% of the company’s shares. However, questions remain about the fate of the shares owned by the estate of tTech co-founder Hugh O’Brian Allen, who passed away in April 2024.
Corporate Restructuring and Financial Performance
Since Simply Secure’s initial investment, tTech has been undergoing a significant restructuring to streamline its operations and integrate its workforce with that of Simply Secure. This includes consolidating support desks and improving customer engagement to strengthen its security offerings.
However, these changes have come at a financial cost, driving up the company’s expenses by 44% in the third quarter, largely due to restructuring and termination benefits. This resulted in a decline in operating profit, which swung from a positive $6.5 million in the previous period to a loss of $5.9 million. tTech’s revenue has also seen a decline of 5% year-on-year, totaling $336.19 million for the nine-month period, with a reported net loss of $75,000, compared to a net profit of $18.6 million in the same period last year.
Despite these challenges, tTech’s market capitalization saw a 15% rise on Monday, closing at $2.53 per share, bringing its total market value to $268.18 million. This increase in share price reflects a potential positive outlook as the company navigates the changes prompted by its new majority shareholder.
Looking Ahead
Simply Secure’s purchase of tTech represents a pivotal moment for both companies, as it aligns their strategic objectives and integrates their teams to compete in the growing cybersecurity and IT services sector. With the mandatory takeover bid set to unfold, the future of tTech rests on the decisions of its remaining shareholders. For Simply Secure, this acquisition marks a significant expansion of its regional footprint, consolidating its presence in the rapidly evolving IT services market.
As both companies adapt to their new realities, the true impact of this merger will unfold in the coming months, particularly as tTech continues its restructuring and attempts to regain financial stability.
