Austco Healthcare (ASX:AHC) entered into a conditional binding term sheet to purchase Guild & Spence Technologies for an upfront cash payment of nearly NZ$8 million, according to a Wednesday Australian bourse filing.

The transaction is expected to close on or before June 1 and is subject to Austco completing its due diligence, agreement on final form transaction documents, and minority shareholders agreeing to be bound to the transaction.

G&S Technologies will be integrated into existing operations and key personnel will be retained to provide a smooth transition for customers and employees.

The proposed transaction also includes an earnout payment based on the performance of the business for the period between completion and Dec. 31, 2026, based on 3.5 times the annualized earnings before interest, taxes, depreciation, and amortization achieved through the earnout period.

The proposed deal supports the healthcare firm's strategic objectives of expanding its direct sales capability, per the filing.

The integrated communications and security systems provider predominantly operates in healthcare and aged-care sectors across New Zealand.

Its shares fell 4% on market close Wednesday.