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Digital payments and financial technology company Mogo Inc. (MOGO) has agreed to acquire Canadian investment dealer Fortification Capital with a combination of cash and Mogo common shares.
The consideration includes $500,000 in cash, 75,000 Mogo shares, and an additional cash payment of $550,000 that is equal to Fortification’s working capital and the value of repayment of its subordinated debt.
The move helps Mogo take another step towards launching commission-free stock trading through MogoTrade. As part of the acquisition, Mogo will receive the required licenses, registration, and technology it needs to facilitate order management and market data processing. The purchase of Fortification Capital will add order execution only (OEO) capabilities to Mogo’s platform, which regulations require as a prerequisite for Mogo to offer stock trading to its members.
Mogo Founder and CEO David Feller said, “We continue to see a secular shift to digital wealth platforms, and our goal at Mogo is to build the leading digital wealth platform in Canada, which will include zero-commission stock trading and a simple and intuitive modern user experience.” (See Mogo stock analysis on TipRanks)
Feller added, “The proposed acquisition would provide us with a registered investment dealer platform, as well as regulatory and technology capabilities-key building blocks for our trading offering.”
On May 14, Canaccord Genuity analyst Doug Taylor upgraded the stock to Buy from Hold and lowered the price target to C$12 (38.2% upside potential) from C$14.
Recently, Mogo announced plans to increase its stake in Coinsquare from 19.9% to 37% with a purchase warrant to further take it to 48%. Taylor views this move as a positive development.
Consensus among analysts is that Mogo is a Strong Buy based on 4 unanimous Buys. The average analyst price target of $12.91 implies 79.3% upside potential.
Shares have gained about 761% over the past year.