Security technology company 4C Security Solutions (ASX:FCS) has proposed to acquire locking system developer Magna Electronics.
The parties have signed a conditional agreement, pending the completion of due diligence.
Under the proposal, 4C Security will acquire Magna Electronics in exchange for a three-stage payout.
The first tranche of the payment would be $150,000 cash and 10 million FCS shares at the market value of $0.03 per share.
A second payment would be shares to the value of $250,000 due on March 31 next year, while the final tranche would be a share payout equal to five times the ebitda of the company for the 2011 calendar year.
The cash component of the acquisition would be funded through 4C Security's existing reserves.
Magna Electronics is headquartered in Singapore, and has manufacturing and R&D facilities in New Zealand.
The company produces electronic security locks for both the residential and industrial markets.
4C Security produces a range of security and access control systems, including biometric and smart card terminals and CCTV systems.
FCS shares jumped 5.13 per cent to $0.041 in Wednesday's trading following the announcement.