TIDMDBOX
RNS Number : 6799A
Digitalbox PLC
01 October 2020
1 October 2020
Digitalbox plc
("Digitalbox" or the "Company")
Acquisition, Proposed Subscription
and
Board Update
Digitalbox plc (AIM: DBOX), the mobile-first digital media
business, which owns Entertainment Daily and The Daily Mash, today
announces the acquisition of the entire issued share capital of Tab
Media Limited ("Tab Media") for a cash consideration of GBP750,000
(the "Acquisition").
In conjunction with the Acquisition, the Company announces a
proposed direct subscription to raise GBP 1.2 million, before
expenses, through a subscription for 24,489,795 new ordinary shares
in the Company at a subscription price of 4.9 pence per ordinary
share by Downing Strategic Micro-Cap Investment Trust plc (the
"Subscription"). The Subscription is conditional on shareholders'
approval at a general meeting of the Company. The Acquisition is
not conditional on the Subscription or on shareholders'
approval.
Acquisition
Tab Media runs an online news website, The Tab, covering youth
and student culture for UK university students. The Tab operates a
national website, as well as 32 sub-sites individually focused on
specific universities across the UK. Content is produced by a
professional team for the national site with student journalists
adding to this via their local sites. Founder Jack Rivlin will
remain in place on a consultancy basis to ensure a smooth
transition of the business to the Digitalbox platform and the
editorial team will remain unchanged as the Company integrates the
business to benefit from the Digitalbox model.
The Acquisition is expected to be marginally accretive to
earnings per share as enlarged by the Subscription in the first
full year and significantly accretive in the second full year
following the Acquisition.
The cash consideration for Tab Media is GBP750,000 on a
cash-free debt-free basis, subject to an adjustment for working
capital. The Acquisition is being effected via Digitalbox
Publishing Limited, a wholly owned member of the Company's group
(the "Group") and will be funded from the Group's existing cash
resources.
In the financial year ended 31 December 2019, Tab Media's
unaudited management accounts reported revenue was approximately
GBP1.2 million, with gross profit of GBP0.9 million and loss before
tax of GBP0.4 million. Gross assets as at 31 December 2019 were
GBP0.6 million.
Subscription
The Company proposes to issue 24,489,795 new ordinary shares
(the "Subscription Shares") to Downing Strategic Micro-Cap
Investment Trust plc (the "Subscriber"), at a price of 4.9 pence
per share (the "Subscription Price"), raising gross proceeds of
GBP1.2 million. The proceeds of the Subscription will be used to
accelerate the Company's growth strategy through further
acquisitions.
The Subscription Price represents a discount of 2.0% to the
closing price of 5.0 pence on 30 September 2020. The Subscription
Shares represent 26.7% of the Company's existing issued share
capital at the date of this announcement and will represent 21.1%
of the Company's enlarged issued share capital immediately
following the issue of the Subscription Shares.
The Subscription is conditional, inter alia, upon the approval
by Shareholders at a general meeting of the Company which is
expected to be convened on or around 19 October 2020 (the "General
Meeting"). The Company has received irrevocable undertakings from
certain shareholders and Directors of the Company in respect of
33,208,692 ordinary shares representing approximately 36.2% of the
existing issued share capital to vote in favour of the resolutions
to be proposed at the General Meeting.
A circular (the "Circular") is expected to be posted today which
will contain details regarding the Subscription and the notice
convening the General Meeting of the Company at which the
resolutions will be proposed for the Company's shareholders to
approve, inter alia, resolutions authorising the Company to issue
the Subscription Shares on a non pre-emptive basis. Copies of the
Circular will be available on the Company's website
www.digitalbox.com .
The Subscription Shares will be allotted and issued fully paid
and will, on issue, rank pari passu with the existing ordinary
shares. Application will be made to the London Stock Exchange for
the Subscription Shares to be admitted to trading on AIM. Admission
of the Subscription Shares to trading on AIM is expected to occur
at 8.00 a.m. on or around 20 October 2020 ("Admission").
As part of the Subscription, the Company and the Subscriber have
entered into a relationship agreement (the "Relationship
Agreement"), which will be conditional on, and take effect from,
Admission and remain in force for so long as the Subscriber,
together with its affiliates, holds at least 10% of the voting
rights in of the issued share capital of the Company. Pursuant to
the terms of the Relationship Agreement, the Company has agreed,
inter alia, to grant the Subscriber the right to appoint an
observer to any meetings of the board of directors. Further details
of the Relationship Agreement will be set out in the Circular.
Board Update
Pursuant to the Subscription Agreement, Robin Miller, Chairman
of the Company, has indicated his willingness to resign as Chairman
and step down from the Board. Robin will remain in his role and
oversee a smooth transition of his responsibilities until a
successor is appointed.
The Company will immediately commence a search process for
independent non-executive chairman candidates, and a further update
in this regard will be made in due course.
James Carter, Chief Executive of Digitalbox said:
"The Tab is the UK's leading youth culture platform fuelled by
students and a pro team of journalists who love being first with
the most relevant stories. The Tab provides a really exciting
addition to our portfolio. As well as providing insights into youth
and student culture, it is an important training ground for
journalists.
As achieved with The Daily Mash, our technology platform can
help drive traffic and advertising revenue to support the site.
Since we acquired The Daily Mash in 2019, we have grown traffic and
revenue whilst allowing the editorial team to get on with what they
do best, and we aim to do the same with the Tab. We very much look
forward to working with Editor-in-Chief, Grace Vielma and her team
as we look to grow and enhance The Tab."
Jack Rivlin, Co-Founder and Chief Executive of Tab Media
said:
"I'm thrilled The Tab is joining such an exciting and
fast-growing company, which has proven it can combine influential
brands, huge audiences and a profitable business model. We received
a number of bids during this process, but Digitalbox stood out as a
business with a fantastic track record, run by extremely
trustworthy people.
This is an important moment for our staff and our huge network
of student journalists, who are now part of a company destined to
become a major force in the media industry. They will work
alongside talented digital journalists at Entertainment Daily and
the iconic Daily Mash, which we have admired for a long time."
ENDS
Digitalbox c/o Newgate Communications
James Carter, CEO
WH Ireland (Nominated Adviser & Tel: 0117 945 3470
Joint Broker)
Mike Coe / Chris Savidge
Panmure Gordon (Financial Adviser Tel: 020 7886 2500
& Joint Broker )
Alina Vaskina / Sandy Clark (Corporate
Advisory)
Erik Anderson / Rupert Dearden
(Corporate Broking)
Alvarium Capital Partners (Joint Tel: 020 7195 1400
Broker)
Alex Davies / Hugh Kingsmill Moore
Newgate Communications Tel: 020 3757 6880
Robin Tozer / Isabelle Smurfit digitalbox@newgatecomms.com
(Financial PR)
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
About Digitalbox plc
Based in Bath, UK, Digitalbox is a 'pure-play' digital media
business with the aim of profitable publishing at scale on mobile
platforms.
Digitalbox operates two trading brands, "Entertainment Daily"
and "The Daily Mash". Entertainment Daily produces and publishes
online UK entertainment news covering TV, showbiz and celebrity
news. The Daily Mash produces and publishes satirical news
content.
Digitalbox generates revenue from the sale of advertising in and
around the content it publishes. The Group's optimisation for
mobile enables it to achieve revenues per session significantly
ahead of market norms for publishers on mobile.
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END
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