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Inside Life360’s big buy of Tile

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The Life360 Inc (ASX: 360) share price won’t be moving today after the company announced a capital raising to fund the US$205 million (AU$283 million) acquisition of Tile.

Tile is a hardware company that helps customers keep track of items such as backpacks, keys and passports by attaching ‘Tiles’, which come in a variety of shapes and colours.

The acquisition brings together the location people (Life360) and objects (Tile) onto one central platform.

  • Source: 360 strategic acquisition of Tile & Equity Raise presentation

    Nitty-gritty

    Life360 will pay US$170.0 million upfront to acquire Tile with an additional US$35.0 million in retention awards.

    Of the upfront payment, US$132.4 million will be in cash while up to US$37.6 million in new Life360 shares will be issued subject to performance hurdles.

    The additional US$35.0 million in retention equity awards are subject to certain revenue and EBITDA targets over the next two quarters.

    Raising from old and new

    To fund the purchase, Life360 will complete an equity raising consisting of:

    • Entitlement offer to existing shareholders of one new share for every 15.64 Life360 shares currently owned, raising AU$119.8 million
    • A placement of 13.4 million shares to new institutional shareholders, raising AU$160.2 million

    The new shares will be issued at a share price of $12.00. The Life360 share price before announcing the raising was $13.51.

    In total, Life360 will raise AU$280 million, almost equal to the Tile purchase price.

    However, given some of the purchase is funded by shares, Life360 will have excess cash and subsequently increase its cash on hand by AU$80.6 million.

    Overall, Life360 will increase its current share count by 14.9%.

    Foes become friends

    After indirectly competing for several years, the two foes have joined forces.

    Life360 Founder of Chief Executive Chris Hulls described the acquisition as the biggest impact deal in the company’s history:

    “As some backstory, I met the [Tile] Co-Founders, Nick Evans and Mike Farley, back in 2014. We connected immediately because it was clear to us that we would either be working together or be competitors at some point in the future, as we both had what I’ll call the religious belief that location would be part of everything. We had the platform of mobile phones covering people. They had the hardware device covering things. We almost joined the companies together many times in our history, … so this is not an opportunistic deal… but rather the acquisition I’ve been hoping to make for the better part of a decade”.

    My take

    Life360 has been flagging a big acquisition for the better part of 12 months.

    It’s finally pulled the trigger, and the deal on face value makes sense financially and strategically.

    Information warning: The information in this article was published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169




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