Trading in Snipp was briefly halted Monday on news that the company had agreed to acquire a competitor, Hip Digital Media, of Menlo Park, CA. SNIPF shares were off a nickel on volume of more than two million shares, but I wouldn’t read too much into it. “The acquisition of Hip is advantageous across many dimensions,” said Snipp CEO Atul Sabharwal. “Its robust rewards solution and technology is very complementary and can easily be bolted onto our receipt-processing and loyalty platforms. Hip’s strengths in sales and marketing complement our own, and instead of two companies chasing down the same set of shopper marketing clients, we now have one company targeting twice as many clients. We also have the benefit of bringing on an experienced team with many years of collective experience in the shopper marketing and promotions space.”

SNIPF will pay up to 12,878,788 shares for the acquisition, for a target price of $8.5 million, but two thirds of that will be doled out quarterly, based on Hip’s meeting certain financial targets over the next 12 months. Hip will operate as a wholly owned subsidiary, and its employes could reap generous stock bonuses if they perform well following the merger.

From a technical standpoint, even after yesterday’s decline the stock remains on track to hit the 0.8320 (U.S.) target shown.  That would push SPN (Snipp Interactive’s symbol on the Canadian Venture Exchange) above $1 for the first time.  More immediately, however, SNIPF will need to vault a 0.6550 midpoint “Hidden Pivot” that has stymied bulls since April. A two-day close above that price, or an intraday move exceeding it by two to three cents, would greatly shorten the odds of a finishing stroke to at least 0.8320.

Rick’s Picks first recommended the stock in January 2014, when it was trading for around 15 cents U.S. Full disclosure: I own shares and warrants in this company. _______ UPDATE (June 3, 9:35 p.m.): Sellers have pounded the stock since the announcement earlier in the week that Snipp will acquire Hip Digital Media. I see no reason whatsoever for concern, since the company is the same, very well-run, aggressive, energetically imaginative firm that it was before the acquisition. Hip will add to the mix a new revenue stream and many new, blue-chip clients. In addition, its employees will have strong incentives under the provisions of the deal to produce results over the next twelve months.  Going forward, we should continue to judge Snipp on the basis of three questions: 1) Is revenue growing? 2) Will their space continue to grow? and, 3) Are they executing? Snipp rates a solid ‘yes’ on all three questions, and that’s why I have no qualms about holding its shares for the long haul. The $1 threshold is obviously key, and it could take a while for the stock to turn it from resistance to support. However, I remain completely confident that this will happen eventually.  So who are the sellers? My guess is that at least a few are quick-buck artists who got in on the “bought sale” in February underwritten by Canaccord. This transaction diluted shareholder equity to the tune of $12M (CDN) at 0.55 a share. The implication is that once the short-term opportunists are out of the stock, there will be very substantial support near 0.55 (CDN) for base-building that will set the stage for a push to $1 and beyond. _______ UPDATE (June 22): Relentless selling has driven the stock down to 0.55 CDN, as expected.  The corresponding target for SNIPF priced in dollars is 40.62 cents. Let’s see if this Hidden Pivot support holds.