Business Context and Reporting Period
This Form 6-K filing by Globant S.A. covers the month of August 2020, specifically reporting on a transaction closed on July 31, 2020. The Company, a digital business consulting firm, acquired 100% of the equity interests in Grupo ASSA Worldwide S.A. ("Grupo ASSA"), a digital business consulting company with operations in Latin America, Europe, and the United States.
Key Financial Metrics and Transaction Structure
The acquisition consideration totals a base of USD 74,500,000, subject to adjustments. The payment structure is as follows:
- Closing Payment: USD 45,000,000 (subject to working capital and receivable adjustments). Of this amount, USD 42,000,000 was paid in cash using funds on hand, and USD 3,000,000 was paid via the issuance of common shares ("Tranche 1 Shares").
- Deferred Payment: USD 17,000,000 due on the 24th-month anniversary of closing. This will be paid via the issuance of common shares ("Tranche 2 Shares"), subject to contingencies.
- Contingent Consideration: Up to USD 12,500,000, payable no later than March 31, 2021, based on Grupo ASSA's achievement of specified revenue and gross margin targets for the period August 1, 2020, through December 31, 2020.
The filing does not provide specific revenue, profit, cash flow, or margin figures for Globant S.A. or Grupo ASSA for the reporting period, as this document focuses solely on the acquisition announcement.
Material Changes
The primary material change is the expansion of Globant's operations through the acquisition of Grupo ASSA. The transaction was signed and closed simultaneously on July 31, 2020. The Company utilized existing cash on hand for the immediate cash portion of the deal, avoiding new debt financing for the upfront payment.
Outlook, Risks, and Unusual Items
Share Issuance and Lock-up: The sellers subscribed for up to USD 20,000,000 of Globant common shares. Tranche 1 Shares (USD 3,000,000) are subject to a lock-up provision releasing on a staggered schedule starting September 30, 2021. Tranche 2 Shares (USD 17,000,000) may be deferred for an additional 12 months to cover contingencies.
Valuation Methodology: The subscription price per share for the equity portion of the deal is based on the volume-weighted average trading price of Globant's common shares during the 60-day period prior to the applicable issuance date.
Risks: The filing includes a cautionary note regarding forward-looking statements, noting that actual results may differ materially due to risks identified in the Company's most recent Form 20-F. The contingent payment is explicitly tied to future performance targets.
Investor Verification Checklist
- Verify the final purchase price adjustments related to working capital and accounts receivable.
- Monitor Grupo ASSA's revenue and gross margin performance for the period ending December 31, 2020, to determine the final contingent payment amount.
- Review the specific staggered release schedule for the Tranche 1 Shares lock-up provision.
- Assess the dilution impact of the share issuances based on the 60-day volume-weighted average price at the time of issuance.
- Confirm the integration progress of Grupo ASSA's operations in Latin America, Europe, and the U.S. into Globant's existing platform.