Digimarc Corporation (DMRC) shares surged 25.50% after news of investment in the company emerged on Tuesday. TCM|Strategic is an investment fund managed by Riley McCormack which has decided to invest $53.5 million in the company. The investment will be made through common as well as preferred stock purchasing.
The investment will provide the company with sufficient capital for the future strategies. It will also allow management to better focus on business growth and accelerate launch of Digimarc Barcodes on a bid to replace traditional barcodes, said Bruce Davis, Chairman and CEO.
Two conclusions made TCM|Strategic to decide upon current investment, as explained Mr. McCormack. The Legacy and the Growth Businesses of Digimarc are separately worthier than company’s current enterprise value. Secondly, the Growth Business is not only an opportunity for the company but it could also be significantly more valuable in the times ahead.
Through the current investment, TCM came purchasing nearly 2.5 million shares of Digimarc’s common stock as larger part of its investment. The number of shares accounts for 19.69% of its outstanding shares. TCM will spend the remaining amount of investment purchasing company’s convertible preferred shares, depending upon the satisfactory completion of the deal. The convertible preferred shares will stand converted in common stock after shareholders’ approval, required to comply NASDAQ Listing Rules.
As per terms of investment, TCM will invest a total amount of $53.5 million. Purchase price of common stock has agreed to be $14.37 per share. The agreed share price is at a discount of 15% to the average closing price of company’s share from August 24 to September 28, 2020. TCM will not be allowed to transfer shares of common stock acquired as part of current investment for a time period of one year following the closing. The same condition has been applied to the preferred shares but for a time period of six month after the closing.
As part of the current investment, Riley McCormack will be appointed to the Digimarc’s board.