Singapore: Cloud backup firm DropMySite pursues reverse takeover deal with ASX-listed Excalibur Mining

Visual of DropMySite homepage, January 2016.

Singapore-based cloud backup company DropMySite is in the middle of a reverse takeover deal with ASX-listed Excalibur Mining Corporation, enabling the firm to pursue a backdoor listing.

Excalibur is trading on the ASX at A$0.02, with a market capitalisation of A$3.843 million.

DropMySite’s services include website, email, and Android phone backup, with its technology available in more than 100 countries. To date, it has raised an undisclosed amount of equity financing from 500 Startups in a 2013 seed investment. It also acquired US-based Orbitfiles in 2012, which expanded its footprint to North America.

In a development first reported by Business News Western Australia, the reverse takeover (RTO) deal or backdoor listing, would allow DropMySite to go public without the burden of compliance processes involved in an initial public offering (IPO).

An RTO results when a buyer issues its own stock at a purchase price consideration to a seller, resulting in the buyer issuing enough shares that the reverse merger/reverse IPO sees the purchase of these shares result in shareholders of the selling firm controlling most of the outstanding stock of the combined entity.

An RTO can see the merging of both companies’ operations or, the creation of a shell corporation allowing the independent operations of both companies. However, it can also indicate a weakness in the target company, Excalibur Mining, and should be a warning to investors to be cautious.

In order to meet approval, the deal must see 85 per cent of DropMySite’s shareholders approve it, alongside majority shareholder approval from Excalibur investors. Additionally, both films must comply with the first and second chapters ASX’s listing rules with regard to requirements for listing and quoting of securities.

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The pursuit of this is a both a reflection of the current inadequate state of public equity markets in Singapore and the deficit of IPOs in the Singapore bourse in the near to medium term. The leadership team of DropMySite is also likely to face challenges in adapting to the different requirements needed in navigating public equity markets.

However, incumbent CEO Charif El-Ansari has served tenures as a senior executive with publicly-listed corporations like Dell and Google. He joined the venture in 2013, replacing then-CEO John Fearon.

At the time, El-Ansari commented to the Singapore Business Review: “It is great to take the helm of a successful startup and then work with the team on moving it to the next level. it is a great challenge to have. I wanted to work in a smaller company in the internet space, where decisions get made much faster and the whole team is working closely together.”

He added, “By the time I left Google, there was about 30,000 employees. Dropmysite fit the bill really nicely, plus I believed in the model and the value proposition from early on and was one of the earliest investors.”

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