XTEK Limited (ASX:XTE) entered into a binding agreement to acquire HighCom Armor from HighCom Global Security, Inc. (OTCPK:HCGS) and others for AUD 3.6 million on July 17, 2019. Purchase consideration comprises of 4 million XTEK shares, AUD 1.8 million cash consideration, and future earnout payment of 5 XTEK shares per dollar above HighCom's adjusted calendar year 2019 EBITDA of $0.905 million (AUD 1.29 million). The proceeds from the placement of AUD 2.7 million and share purchase plan to raise up to AUD 0.86 million to fund acquisition and other growth opportunities.

HighCom generated calendar year 2018 revenue of AUD 10.5 million, gross margin of 40% and EBITDA of AUD 1.4 million and the acquisition of HighCom represents a transaction EV / EBITDA multiple of 2.6x calendar year 2018 EBITDA pre future earnout payment. The transaction is subject to the necessary regulatory and HighCom shareholder approvals. The transaction is expected to close in September 2019.

The acquisition is expected to be immediately value and earnings accretive in financial year 2020 before synergies and amortization.