Boku, a company that lets users charge smartphone purchases to their bills from companies like Apple, Microsoft and Spotify, among others, has purchased Danal, an outfit that specializes in phone identity and authentication, according to a report from a tech publication.
The merger will allow for better and more secure transactions, as well as expansion into potential new arenas, such as finance and government. Boku’s stock fell more than 23 percent on Thursday (Dec. 6) in response to the news.
The company expects the deal to dilute earnings in fiscal year 2019, but anticipates that things will improve through 2020 and beyond. Danal will combine with a U.S. subsidiary of Boku, and will no longer exist.
“This acquisition allows us to offer services that go further and to improve user quality for our customers, while at the same time improving the mobile experience for users," said Boku Chief Executive Jon Prideaux. “Mobile commerce is booming, yet many tools were developed to support PC-based commerce. Danal has shown that MNO (mobile network operator) data can also combat fraud, reduce friction in signup and ensure regulatory compliance on mobile. These problems are relevant not just to our existing digital customers, but also in other sectors, including eCommerce, finance, transportation and government.”
Boku is paying $68 million for Danal. The deal, which the company is calling a “reverse triangular merger,” includes 26.7 million Boku common shares of $0.0001 each, $3 million worth of Boku warrants at 141p each and also $1 million in cash. There’s also a deferred consideration of $64 million, depending on Danal’s future performance.
Boku wants to bridge carrier-held data with services users might engage with on phones or other digital platforms. While this will probably include purchases through billing, it also has potential applications to secure transactions for financial or government-run services, or any service that needs to authenticate a user.