REG - Ebiquity PLC - Proposed Acquisition of Media Management, LLC.

EbiquityAnnouncement

30/03/2022 07:00

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RNS Number : 4878G  Ebiquity PLC  30 March 2022

30 March 2022

 

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED ("MAR").

 

Ebiquity Plc

 

Proposed Acquisition of Media Management, LLC.

 

Ebiquity plc ("Ebiquity" or the "Company"), a world leader in media investment
analysis, is pleased to announce the proposed acquisition by Ebiquity Inc.,
the Company's US subsidiary, of Media Management, LLC. ("MML"), a US-focused
media audit specialist, for an initial consideration of £6.1 million(1) with
a deferred consideration element payable in 2025 (the "MML Acquisition").

Acquisition Highlights

·    MML is a US media audit company providing clients with transparency
and accountability of their media investments, and agency performance
validation using its proprietary Circle Audit® technology

·    The MML Acquisition accelerates the scaling of Ebiquity in the
world's largest advertising market, and increases its presence with large US
corporates

·    MML's automation practices and combination of the two businesses will
improve operating efficiencies and drive realisable cost synergies across the
enlarged business

·    In the financial year to 31 December 2021, MML reported revenue of
£5.4 million and operating profit of £0.7 milion(2)

·    Initial consideration of £6.1 million(1) payable in cash on
completion of the acquisition

o  c.£5.1 million(1) (84% of initial consideration) in cash funded from
existing cash resources

o  c.£1.0 million(1) (16% of initial consideration) in cash applied by the
MML Vendors (as defined below) to subscribe for 1,737,261 new Ordinary Shares
of Ebiquity (the "MML Shares"). The MML Shares will be subject to an 18-month
lock-in and an ongoing orderly market agreement

·    Deferred consideration payable in 2025

o  Based on 1.0x of 2024 reported adjusted earnings before interest and tax
of the combined Ebiquity US and MML businesses expected to be at least £3.0
million(3)

o  80% payable directly in cash to the MML Vendors; 20% in cash to be applied
by the MML Vendors to subscribe for new Ordinary Shares of Ebiquity and they
will be subject to the same lock-in and orderly market provisions as the MML
Shares

·    Completion of the MML Acquisition is conditional on the admission of
MML Shares to trading on AIM expected on or around 4 April 2022

Overview of MML

MML is a US-based media audit company providing clients with transparency and
accountability of their media investments, and agency performance validation,
founded in St Louis, Missouri in 1995 by Thomas Bridge. MML uses a proprietary
circle audit technology that enables it to analyse 100% of its clients' "media
buy" data from all major "media buy" management platforms. MML has a 40-person
team centred in St Louis and distributed across the US. The company has a
high-quality client roster that includes Geico, GM, AT&T, AstraZeneca and
Samsung with average client tenure of 11 years. The founder and current chief
executive officer of MML, Thomas Bridge (the "Founder"), will remain with the
business and join Ebiquity's North American management team.

In the financial year ended 31 December 2021, MML's revenue grew c.29%
year-on-year to £5.4 million and it made an improved operating profit of
£0.7 million with operating profit margin of 13.4%(2). As at 31 December
2021, MML had gross assets of £1.8 million(2).

Acquisition rationale

The Board believes that there is a strong strategic and financial rationale
for the MML Acquisition. The acquisition of MML and its complementary service
offering would add scale to Ebiquity's business in the US, the world's largest
advertising market. MML's client roster of blue-chip American corporates will
create significant cross-sell opportunities in the US for the enlarged group.
MML's strong automation practices will improve operating efficiencies and
drive realisable cost synergies.

The Ebiquity Group's business in the US would also be immediately scaled with
revenue of £10.7 million in the financial year to 31 December 2021 on a pro
forma basis(4).

The MML integration will be managed by Ebiquity's US management team headed by
Paul Williamson (MD of Ebiquity's current North American business) and Thomas
Bridge (founder and current CEO of MML).

Consideration

The acquisition is being effected by an agreement dated 29 March 2022 between
Ebiquity, Ebiquity Inc. (the Company's US subsidiary), MML, Bridge Media
Services Inc. (held by the Founder and his closely associated persons,
together with Bridge Media Services Inc., the "MML Vendors") and the MML
Vendors (the "MML Acquisition Agreement").

The initial consideration element for the MML Acquisition is £6.1 million(1)
payable in cash on completion. Of the £6.1m(1) initial consideration, the 16%
(c.£1.0 million(1)) of the cash has been applied by the MML Vendors to
subscribe for 1,737,261 new Ordinary Shares of Ebiquity which has been
calculated (rounded down to the nearest whole number) by reference to the
middle market quotations for the Ordinary Shares as shown by the AIM Appendix
of the Daily Official List of the London Stock Exchange for the five Business
Days prior to the date of this Announcement.

Under the MML Acquisition Agreement, the MML Vendors will hold 1,737,261 MML
Shares following the completion of the MML Acquisition.

The deferred consideration element for the MML Acquisition will be payable in
2025 based on 1.0x of reported 2024 adjusted earnings before interest and tax
of the combined Ebiquity US and MML businesses which is expected to be at
least £3.0 million(3) payable in cash of which the MML Vendors will apply 20%
to subscribe for Ordinary Shares (the "Earn-Out Shares", and together with the
MML Shares, the "New Shares") which will be calculated (rounded down to the
nearest whole number) by reference to the middle market quotations for the
Ordinary Shares as shown by the AIM Appendix of the Daily Official List of the
London Stock Exchange for the five Business Days prior to the date the
deferred consideration is agreed between the parties. The Company expects to
have sufficient cash headroom in 2025 to satisfy the deferred cash
consideration for MML.

Under the MML Acquisition Agreement, the MML Vendors have undertaken, save in
limited circumstances, not to dispose of any of their interests in the New
Shares at any time prior to the 18-month anniversary of the date of their
issue. In addition, in order to ensure an orderly market in the Ordinary
Shares, the MML Vendors have further undertaken they would not, save in
limited circumstances, deal or otherwise dispose of any such interests in the
New Shares other than through Panmure Gordon (or such other broker appointed
by the Company from time to time).

The MML Acquisition has been financed through the Company's existing cash
resources and the MML Shares will be issued under existing Shareholder
authorities. The MML Acquisition will complete conditional on admission of MML
Shares to trading on AIM.

Admission of MML Shares

Application will be made to London Stock Exchange plc for the MML Shares to be
admitted to trading on AIM. It is expected that admission of the MML Shares
will take place at 8.00 am on or around 4 April 2022 (the "Admission").

The MML Shares will, when issued, rank equally in all respects with the
existing Ordinary Shares including the right to receive dividends and other
distributions declared following Admission.

 

Nick Waters, Chief Executive Officer of Ebiquity, said:

"This represents an exciting move for us to scale our North American business.
MML brings a team of experienced and highly skilled media specialists,
complementary capabilities, an outstanding patented technology platform in
Circle Audit, and a roster of high-quality blue chip American clients. The
combination of Ebiquity and MML unlocks strong potential for the business, and
significantly advances and scales our business in the US, the world's largest
advertising market."

Thomas Bridge, Founder and current Chief Executive Officer of MML, said:

"MML is excited to join the Ebiquity family, expanding our coverage
domestically & internationally for our clients. This step further
reinforces MML's commitment to our team and our clients in continuing our work
in driving third-party media accountability."

 

Notes

1 MML initial consideration of US$8.0m; US$ / £ exchange rate assumed rate of
US$1.3157.

2 Financial year to 31 December 2021; FX of $1.375; operating profit
calculated on a normalised basis adjusted for owner managed costs including
the salary, benefits and bonus of the founders and other non-trading expenses.

3 MML deferred consideration expected to be at least US$4.0m; US$ / £
exchange rate assumed of US$1.3157.

4 Pro forma financials have been prepared for illustrative purposes only and
by their nature address a hypothetical situation and, therefore, do not
represent the Company's actual financial performance. It is assumed that the
acquisition has taken place on 1 January 2021.

 

Market abuse regulation

This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/201 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018 ("MAR"). Upon the publication of this
announcement via a Regulatory Information Service this inside information is
now considered to be in the public domain.

The person responsible for arranging release of this announcement on behalf of
the Company is Alan Newman, Chief Financial Officer and Chief Operating
Officer of the Company.

 

 Ebiquity plc                                                            +44 20 7650 9600
 Nick Waters, CEO
 Alan Newman, CFO & COO

 Camarco
 Ben Woodford                                                            +44 7990 653 341
 Geoffrey Pelham-Lane                                                    +44 7733 124 226

 Panmure Gordon (Financial Adviser, Nomad and Broker)                    +44 20 7886 2500
 Alina Vaskina / Harriette Johnson / Dougie McLeod (Corporate Advisory)
 Charles Leigh-Pemberton / Sam Elder (Corporate Broking)

 

About Ebiquity plc

Ebiquity plc (LSE AIM: EBQ) is a world leader in media investment analysis. It
harnesses the power of data to provide independent, fact-based advice,
enabling brand owners to perfect media investment decisions and improve
business outcomes. Ebiquity is able to provide independent, unbiased advice
and solutions to brands because we have no commercial interest in any part of
the media supply chain.

 We are a data-driven solutions company helping brand owners drive efficiency
and effectiveness from their media spend, eliminating wastage and creating
value. We provide analysis and solutions through five Service Lines: Media
management, Media performance, Marketing effectiveness, Technology advisory,
Contract compliance.

 Ebiquity's clients are served by more than 500 media specialists operating
from 19 offices covering 80% of the global advertising market.

 The Company has the most comprehensive, independent view of today's global
media market, analysing US$55bn of media spend from 75 markets annually,
including trillions of digital media impressions. Our Contract Compliance
division, FirmDecisions, audits US$40bn of contract value annually.

 As a result, more than 70 of the world's top 100 advertisers today choose
Ebiquity as their trusted independent media advisor.

 For further information, please visit: www.ebiquity.com

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