Strategic Acquisition of Shinez I.O. Ltd
19/03/2024 07:00
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RNS Number : 3859H Team Internet Group PLC 19 March 2024
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR. Upon publication of this announcement, this information is now considered
to be in the public domain.
19 March 2024
Team Internet Group plc
("Team Internet" or "TIG" or "the "Company", or the "Group")
Strategic Acquisition of Shinez I.O. Ltd
Team Internet Group plc (AIM: TIG) is pleased to announce it has entered into
a definitive agreement to acquire the entire issued share capital of a leading
online marketing business, Shinez I.O. Ltd and its subsidiaries (together
"Shinez") from its current shareholders (the "Acquisition").
Business Profile
Shinez specialises in the production and promotion of highly engaging content
across diverse channels such as social media, search engines, and native
networks. Its currently forty popular portals include ourfashiontrends.com,
falafelandcaviar.com and travelerdreams.com. Leveraging this expertise, Shinez
monetises real-time visits through an expansive network of advertising
exchanges, utilising cutting-edge technology and strategies. This approach
maximises the revenue potential of each piece of content, and positions Shinez
at the forefront of digital marketing innovation.
Acquisition Terms
Team Internet will acquire Shinez for an enterprise value of USD 41.8 million,
on a net debt free basis and subject to customary adjustments for net working
capital, payable in cash.
The initial consideration represents a multiple of 4.0x Shinez's FY23 Adjusted
EBITDA. Additional contingent consideration of up to USD 12.3 million will be
due subject to Shinez achieving ambitious financial targets over the next two
years, payable in cash.
Pro Forma Impact
Shinez reported USD 111 million in gross revenue USD 17.2 million in net
revenue and USD 10.4 million in Adjusted EBITDA for the year ending 31
December 2023. Following the acquisition, the enlarged Group's unaudited pro
forma financials for 2023 indicate an estimated gross revenue, net revenue and
Adjusted EBITDA of approximately USD 948 million, USD 208 million and USD 107
million, respectively. Moreover, this acquisition is expected to significantly
enhance earnings per share (EPS), with a forecasted adjusted EPS growth in the
high single-digit percentage range for the pro forma fiscal year 2023, not
accounting for potential synergies.
Funding
The acquisition will be funded through a combination of cash reserves and the
Revolving Credit Facility Agreement.
USD 4.6 million, i.e. 11% of the enterprise value, will be retained in escrow
for four years to cover for customary warranties and indemnification. A
graduated release schedule is planned for the escrow: up to 50% will be
released on the second anniversary of the transaction's completion, followed
by releases of up to 25% each on the third and fourth anniversaries.
Strategic Benefits
· Diversification: Shinez's distinctive content creation and
syndication prowess, complemented by a balanced mix of organic and paid
content promotion strategies, extends our reach into lucrative, underserved
verticals such as Lifestyle, Food, and Travel, among others. This strategic
expansion not only diversifies our portfolio but also unlocks new advertiser
budgets, significantly enlarging our Total Addressable Market (TAM).
· Reduced Monetisation Network Concentration: The strategic acquisition
of Shinez marks a significant shift in our monetisation network concentration.
On a FY23 pro forma basis, this acquisition would more than double the Online
Marketing segment's revenue generated independently of our Tier 1 channel
partner. Specifically, it elevates the segment's independent revenue share
from 15% to an impressive 27%. On a group level, the independent revenues
increase from 33% to 41%.
· Enhanced Capabilities: Merging Shinez's expertise in media buying,
content creation, and campaign optimisation with TIG's existing expertise will
significantly strengthen our business model.
· Synergy Opportunities: We anticipate significant growth and revenue
synergies, including reciprocal cross-selling to and from Shinez's and TONIC's
publisher bases and deeper vertical integration with major networks, in
particular Meta.
Completion Timeline
The Acquisition is expected to complete by late April/early May 2024, with all
closing conditions anticipated to be satisfied, with the first full
consolidation in Q3 2024.
CEO's Perspective
Michael Riedl, CEO of Team Internet, commented:
"This acquisition marks a pivotal transformation for Team Internet Group,
seamlessly aligning with our innovative OM(2) vision - Omni-Media,
Omni-Monetisation. Our vision is to establish a versatile platform that
expertly guides internet users across diverse media landscapes (Omni-Media)
and steers them towards the most effective monetisation avenues
(Omni-Monetisation). The addition of Shinez's capabilities and market reach
will not only diversify our revenue streams but also accelerate our growth
trajectory. We are excited about the prospects this partnership brings. We
welcome the Shinez team to the Team Internet Group."
-Ends-
For further information:
Team Internet Group Plc +44 (0) 203 388 0600
Michael Riedl, Chief Executive Officer
William Green, Chief Financial Officer
Zeus (NOMAD and Joint Broker)
Nick Cowles / Jamie Peel / James Edis (Investment Banking) +44 (0) 161 831 1512
Dominic King (Corporate Broking) +44 (0) 203 829 5000
Berenberg (Joint Broker)
Mark Whitmore / Richard Andrews / Alix +44 (0) 20 3207 7800
Mecklenburg-Solodkoff
SEC Newgate (for Media) +44 (0) 203 757 6880
Bob Huxford / Alice Cho / Harry Handyside / Tom Carnegie teaminternet@secnewgate.co.uk (mailto:teaminternet@secnewgate.co.uk)
About Team Internet Group plc
Team Internet (AIM: TIG) creates meaningful and successful connections from
businesses to domains, brands to consumers, publishers to advertisers,
enabling everyone to realise their digital ambitions. The Company is a leading
global internet solutions company that operates in two highly attractive
markets: high-growth digital advertising (Online Marketing segment) and domain
name management solutions (Online Presence segment). The Company's Online
Marketing segment creates privacy-safe and AI-generated online consumer
journeys that convert general interest online media users into confident high
conviction consumers through advertorial and review websites. The Online
Presence segment is a critical constituent of the global online presence and
productivity tool ecosystem, where the Company serves as the primary
distribution channel for a wide range of digital products. The Company's
high-quality earnings come from subscription recurring revenues in the Online
Presence segment and revenue share on rolling utility-style contracts in the
Online Marketing segment. For more information please
visit: www.teaminternet.com (http://www.teaminternet.com/)
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