LiveTiles accelerates growth plans with acquisition of My Net Zero

Karl Redenbach, Co-Founder and Chief Executive Officer at LiveTiles

LiveTiles Limited, a global employee experience software for employee collaboration and communications organisation, is pleased to announce it has entered into a binding agreement to acquire the remaining 80.03% of leading climate change consultancy business, My Net Zero following its initial 19.97% strategic minority investment in December 2021.

What is the market offering of My Net Zero?

My Net Zero is a climate advisory, tech platform and marketplace enabling employers to involve and activate their people in positive climate action. With the climate crisis in the top three concerns of employees across all demographics, My Net Zero provides a framework of communication and support to respond to employee concerns and support desired actions.

795 of the top 2,000 businesses in the world have made organisational Net Zero initiatives. Those top 2,000 businesses employ 89,000,000 people, yet very few of these businesses have action plans that are focussed on the employee engagement angle to help support net zero plans. In the post covid workplace, most businesses are battling with employee engagement and the environment is the number one area of concern for employees.

My Net Zero offers employers both the behavioural-change advice and practical tech platform to translate, connect and implement tangible action on climate change not only from employees but also other stakeholders (consumers, students, members).

What does the combined offering mean for clients?

The LiveTiles and My Net Zero partnership was formed in 2021 following a study into the Employee Experience market which found that employees prefer to work for companies that had a greater purpose, with climate action being very high on people’s priorities.

This is propelled by national and international pressure for companies to target net zero emissions with Australia committing to a 2050 net zero goal and approximately 70% of ASX200 companies having committed themselves to a sustainability strategy.

In September this year, LiveTiles and My Net Zero ran a major event in New York City during New York Climate Week called ScopeX, where executives from some of the largest United States companies attended as part of their own sustainability plans to engage employees and other related parties in their Environmental, Social and Governance strategy.

The acquisition of My Net Zero and its product offering follows rapidly growing demand from existing LiveTiles customers and provides a unique opportunity to accelerate growth and perfectly align with the changing employee engagement needs of global leading enterprises.

The first product to launch between the collaboration of LiveTiles and My Net Zero was Reach Zero, as announced on 19 September 2022. The solutions, Reach Zero, leverages the underlying LiveTiles Reach technology along with enhancements to address the key needs of enterprise customers regarding climate action, sustainability and employee engagement.

The newest joint product is Green Teams, an initiative that allows employees to offset their energy consumption at home using reputable renewable energy certificates and has received excellent feedback from users thus far. It is the first practical example of linking employee sentiment and desire for action with an employer supported marketplace of solutions.

What are the terms of the transaction?

  • Subject to revenue targets of $25,000,000 being met over three years, aggregate consideration for My Net Zero is $10,000,000 should all shares in My Net Zero be purchased.
  • The acquisition will take place in tranches from existing My Net Zero shareholders, with the first tranche (bringing LiveTiles shareholding to approximately 55% of My Net Zero) to be paid via the issue of up to 68,310,127 ordinary class shares in LiveTiles, for an equivalent purchase price value of $4,268,399.36.

LiveTiles shares are being issued at a price of the greater of $0.0625 per share, or the 30-day VWAP prior to the issue date.  The ordinary shares issued for this transaction in relation to the first tranche will be from within LiveTiles’ existing capacity under ASX listing rule 7.1.

  • The remainder of the My Net Zero shares may be purchased by LiveTiles over the next 18 months, in one or more tranches, following completion of the initial tranche for an aggregate amount of $5,731,600.64 (bringing the aggregate consideration to $10,000,000 should all My Net Zero shares be purchased).

LiveTiles may at its sole election issue shares in lieu of cash for each subsequent tranche (subject to placement capacity under Listing Rule 7.1). At the end of the 18-month period, or upon an earlier change of control event, the sellers may elect for LiveTiles to purchase the remaining My Net Zero shares at that time.

  • The transaction is subject to conditions precedent including any required approvals from its lenders and the parties signing a formal Escrow and Vesting Deed to record vesting arrangements which have been agreed in principle. Subject to these conditions being met LiveTiles expects to complete the acquisition of the first tranche in 5 to 7 business days.
  • The in principle vesting arrangements presently require all LiveTiles’ shares as issued to be held in escrow and released from escrow in various stages subject to targets being met as follows: (a) 25% vested upfront but released from escrow 31 December 2025; and (b) the remaining 75% to vest and be released progressively from 31 December 2023 until 31 December 2025 subject to financial targets being met.
  • To the extent that consideration is paid in cash then this will be funded from cash reserves at the relevant time.

What were the executives’ thoughts on the acquisition?

My Net Zero Founder and CEO Tim Hodgson said, “My Net Zero couldn’t be more pleased with the opportunity to join forces with LiveTiles to combine our respective strategic goals and provide clients and employees a lot more value than we could each do independently.”

“Customers’ needs have been evolving very quickly through all the various challenges the world has thrown at them in the last two years, everything from the impacts of COVID, to employee engagement priorities. We are looking forward to contributing to the LiveTiles broader sustainability vision and making a significant global impact together,” Tim said.

LiveTiles Co-Founder and CEO Karl Redenbach said, “We have worked with My Net Zero for quite some time now with our relationship going from strength to strength. The acquisition of My Net Zero is timely and natural and allows us to expand our product offering in line with the demands of our clients to accelerate growth and attract larger highly profitable new clients.”