Paltalk, Inc, a communications software innovator that powers multimedia social applications, announced that it has entered into a definitive agreement (the “Acquisition Agreement”), pursuant to which Paltalk will acquire (the “Acquisition”) Newtek Technology Solutions, Inc. (“NTS”), a wholly owned subsidiary of NewtekOne, Inc. (“Newtek”). NTS provides dedicated server hosting, cloud hosting, data storage, managed security, backup and disaster recovery, and other related services including consulting and implementing technology solutions for enterprise and commercial clients across the U.S.
Pursuant to the Acquisition Agreement, Paltalk has agreed to (i) pay Newtek an amount in cash equal to $4,000,000, subject to customary purchase price adjustments (the “Closing Cash Consideration”), and (ii) issue Newtek 4,000,000 shares of a newly created series of Paltalk’s preferred stock, the Series A Non-Voting Common Equivalent Stock (the “Preferred Stock” and such shares issued at the closing of the Acquisition, the “Closing Stock Consideration” and together with the Closing Cash Consideration, the “Closing Consideration”) (in each case, subject to adjustment as further described below). The Preferred Stock will automatically convert into one share of Paltalk common stock (subject to certain customary anti-dilution adjustments) upon the occurrence of certain qualifying dispositions by Newtek.
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The parties expect to consummate the Acquisition in the fourth quarter of 2024 or the first quarter of 2025, and the Acquisition is subject to approval by Paltalk’s stockholders, regulatory approvals, the closing of the Divestiture Transaction (discussed below) and the satisfaction of other customary closing conditions.
At the closing of the Acquisition, based on the number of shares of Paltalk common stock outstanding as of August 8, 2024, Newtek’s equity interest in Paltalk would represent, on an as-converted and fully-diluted basis, approximately 30.3% of Paltalk’s total equity.
Jason Katz, Paltalk’s Chairman and Chief Executive Officer, commented: “This is a transformational acquisition for Paltalk that we believe will provide excellent value for our stockholders. We expect that the Acquisition, once completed, will have an immediate and meaningful impact on our revenue, since NTS’ revenue in 2023 was approximately three times greater than Paltalk’s 2023 revenue. We also expect the Acquisition to provide enhanced opportunities for future growth and optimization. We are extremely excited to enter the cloud infrastructure and cybersecurity sectors with the acquisition of a business we deem ripe for growth both organically and through potential accretive acquisitions in the future. Given our management team’s extensive technology expertise that has been demonstrated throughout the years, we are confident in our ability to integrate, operate and grow this business and enhance stockholder value.
SOURCE: GlobeNewswire