Tinexta (TNXT) Status Update summary

Strategic rationale and deal overview

• Exercised call option on Defense Tech for an enterprise value of €67 million, aiming to expand presence in public administration and private enterprise cybersecurity sectors in Italy.

• Acquisition strengthens position as a key industrial player in Italian cybersecurity, with access to cryptographic and dual-use solutions for defense and critical infrastructure applications.

• Defense Tech's national security clearance and strong client base, including public institutions and leading companies, enable preferred access to public administration and broader markets.

• Proprietary cyber products from Defense Tech will enhance Tinexta Cyber's offering, especially for dual-use and managed security applications.

• The deal is expected to generate industrial and commercial synergies, adding approximately €2 million EBITDA when fully operational and is accretive to group growth and margins.

Transaction structure and financial details

• Initial 20% stake acquired in April 2023; call option exercised for an additional 40.09%, bringing total to 60.09%.

• Call option price based on 12x 2023 adjusted EBITDA plus pro forma adjusted net financial position; equity value for 100% is €62.3 million, with enterprise value for the call option at €67.2 million.

• After the transaction and a mandatory takeover bid, Tinexta is expected to hold about 85% of Defence Tech, with the remainder held by Starlife, and Defence Tech will be delisted.

• Starlife, the management shareholder, intends to tender about 3% and may transfer the residual stake post-offer; a put/call option exists for Starlife's stake, exercisable by 2029.

• Financing secured via dedicated facilities totaling €185 million as part of a club deal signed in April 2024, with favorable terms and covenants.

Defense Tech business profile and outlook

• Defense Tech reported €22.4 million revenue (+1.4% YoY) and €9 million adjusted EBITDA (+11.9% YoY, 40.4% margin) in 2023.

• Business areas include cybersecurity, technology, communication, and microelectronics, serving defense, space, transport, telecom, and finance sectors.

• Revenue expected to grow at a 12% CAGR from 2024 to 2026, with EBITDA margin projected around 29% due to evolving revenue mix.

• Product share of revenue has increased to nearly one-third, with government clients stable at 77% and corporate clients rising to 23%.

• Defense Tech operates five centers across Italy, focusing on government and critical infrastructure clients.