By: Tomas Ronolski - AllPennyStocks.com News

Wednesday, August 5, 2015

Merger and acquisition activity is simply roaring in the U.S. in 2015 and expected to boom globally through 2020. In the United States, a near record level of deals has occurred already this year, paced by more biotech mergers so far than all of 2014. 178 transactions worth $19.2 billion in India in the first six months of 2015 represented an 11.4 percent gain over the same time in 2014. According to a recent report published by the University of Oxford, M&A in the United Kingdom is ready to experience a 70 percent surge in buyouts in the next five years due to a skills shortage. To name just a few of the other countries highlighted in the report, China is forecast to see 153 percent growth in M&A activity, followed by 118 percent for Hong Kong and 110 percent in the Netherlands. Canadians saw a slowdown in M&A deals because of the hit to the energy and metals sectors, as well as the depreciation of the Canadian dollar to its U.S. counterpart. According to a MergerMarket report, inbound activity was notably low, but outbound activity thrived with 55 deals worth US$40.3 billion recorded. Moreover, the vast majority of respondents in the report expect deal making to escalate in the next year.

Chipping-in to second half 2015 totals in Canada is Vancouver’s Lite Access Technologies Inc. (CSE:LTE) (OTCPK:LTCCF), a provider of microduct and fibre optic technologies for extending a network provider's ability to deliver true broadband connectivity directly to end-users. The company just hit the public market with a $1.85 million (gross) private placement and a three-cornered amalgamation early in June with Lite Access becoming the public entity.

That has been followed by three announcements of contracts either direct to Lite Access or to its partner and buyout target DSG Communications, a full-service fibre optic infrastructure provider specializing in fibre optic construction, splicing, maintenance, servicing, repair, and emergency response. Lite Access disclosed a letter of intent to acquire DSG on June 22, but those in the small and microcap world know that all too often LOI’s aren’t executed.

Such was not the case with Lite Access and DSG with news on Wednesday that a definitive securities purchase has been signed between the companies and Dylan and Shirley Griffiths, the owners of DSG. Per the agreement, Lite Access will pay a total of $2.5 million to the Griffiths for all of the issued and outstanding shares of DSG. Payment is structured at $1.0 million in cash spread across the next year and $1.5 million in stock at a basis of 68 cents distributed relatively equally in six months increments for about three-and-one-half years. DSG will operate as a wholly-owned subsidiary of Lite Access, with the Griffiths staying on board as executives and directors.

There is an immediate synergy as the company’s already work together, with DSG being a certified installer of Lite Access' proprietary micro-trench and air blown fibre technologies. The acquisition increases Lite Access’ footprint in the Fibre to the Premise (FTTX) and Fibre to the Home (FTTH) markets, sometimes referred to as "the last mile.” Communications companies are pumping money into upgrades from old copper infrastructure to improve performance of internet, video and voice services, including the last mile, where copper is replaced from the operator’s switching equipment to the end user, whether a business or residence. DSG customers have included municipalities and major telcos like Telus (TSX:T), Rogers Communications (TSX:RCI.B), Bell Canada and Shaw Communications (TSX:SJR.B).

The acquisition will immediately improve the top line for Lite Access as evidenced through a July 22 announcement that DSG was awarded a design and build contract for the town of Waterton, Alberta worth approximately $500,000. This follows DSG winning a contract in June to supply and install a 9.65-kilometer fibre optic network for the Township of Langley, British Columbia. Lite Access' fibre optic technologies are being used in the network to connect Langley’s civic facilities to its operations centre, operations building and the Royal Canadian Mounted Police station.

Investors aren’t reacting much to the news, rising only a penny to $1.31 on less than 9,000 in trading volume through early Wednesday afternoon trading. Although always thinly traded – as many stocks on the Canadian Exchange are – shares of LTE are well up from their low of 50 cents in their couple months of trading and not too far from their “all-time” high of $1.49.

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