BlackLine Buys Rimilia For $150 Million; Analyst Says Hold

BlackLine announced on Friday that it has acquired UK-based Rimilia in a deal worth $150 million. Rimilia provides artificial intelligence-powered cloud-based accounts software that helps organizations control cash flow and cash collection in real time.

Under the terms of the deal, BlackLine (BL) will pay $120 million in cash and an additional $30 million cash will be paid upon meeting certain earnout conditions. The accounting automation software provider said that it will fund the acquisition with available cash-in-hand and the transaction would have no material impact on its 3Q results.

BlackLine stated that the buyout will enhance its “capabilities into an adjacent area, adding AR [augmented reality] automation to financial close automation and accelerating BlackLine’s larger, long-term plan for transforming and modernizing Finance & Accounting.” (See BL stock analysis on TipRanks)

On Oct. 2, Raymond James analyst Brian Peterson said that the deal is well covered by BlackLine’s approximately $630 million of net cash available at the end of second-quarter 2020. Peterson noted that “Utilizing AI [artificial intelligence] and ML [machine learning], Rimilia’s platform helps accelerate the invoice to cash process with key benefits including reduced DSO [Days Sales Outstanding], improved working capital, and driving costs savings through reduced manual processes.” With shares up nearly 71% year-to-date, the analyst reiterated a Hold rating on the stock.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 3 Buys and 3 Holds. The average price target of $92 implies a further upside potential of about 4.4% to current levels.