What happened to the Mitula Group share price?
At time of writing, shares of Mitula Group Ltd [ASX:MUA] are up 60% to 72 cents. The Mitula Group is a leading digital classifieds group operating vertical search, portals and transaction based websites.
Why did Mitula Group shares rise?
The Mitula Group recorded a record quarterly revenue of $9.3 million in first quarter 2018. Up 17.4% over first quarter 2017. 24% of revenue was generated from advertising and transaction-based products. That’s why it’s no surprise the company had a takeover target on its back. It announced a merger with LIFULL Co. Ltd of Japan [TSE: 2120] today, sending the share price though the roof.
What now for Mitula Group Ltd?
In a world where bigger is better, the merger will create a leading global online classifieds and marketplaces group. The Mitula Group and Trovit (a LIFULL subsidiary) will operate in 63 countries around the world with 170 million visits per month. Giving customers access to more traffic and a greater range of products and services.
The transaction is favourable for shareholders, given the 32.4-times NPAT multiple for the previous financial year. That suggests the joint entity see significant growth potential. I agree and believe as a larger entity, the merged company should be able to access more opportunities to grow shareholder wealth.
The Mitula Group and Trovit could become a billion dollar company one day.
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