TIDMJWNG
RNS Number : 6237I
Jaywing PLC
01 September 2016
Embargo: 1 September 2016
This announcement contains inside information
Jaywing plc
Acquisition of Bloom Media (UK) Limited
Placing to raise GBP3 million
Jaywing plc (AIM: JWNG) ("Jaywing" or the "Company"), a UK-based
agency specialising in the application of data science, is pleased
to announce that it has entered into an agreement to acquire the
entire issued share capital of Bloom Media (UK) Limited ("Bloom")
(the "Acquisition"), a digital marketing agency based in Leeds.
Initial consideration of GBP2.41 million is payable to the
vendors of Bloom ("Vendors"), on a cash and debt free basis, and
will be financed from funds raised through a placing with new and
existing investors (the "Placing") and from new bank debt of GBP1.0
million. Additional earn-out consideration of up to GBP5.75 million
is payable to the Vendors, subject to performance criteria, over a
two year period ending March 2018 and will be satisfied through the
Company's own cash resources and debt. Jaywing will apply part of
the placing proceeds towards investment in a newly formed
joint-venture over the next two years. The joint venture will be
responsible for developing the enlarged Company's data product set,
supported by Bloom's existing management team.
The Acquisition is expected to be earnings enhancing within 12
months from completion.
The Placing will raise GBP3 million before expenses (the
"Placing Proceeds") through the issue of 10,000,000 new ordinary
shares of 5 pence each (the "Placing Shares") at 30p per share (the
"Issue Price").
An Application has been made for the Placing Shares to be
admitted to trading on AIM, which is expected to occur at 8.00 a.m.
today ("Admission"). The Placing and Acquisition are conditional on
Admission. Following Admission, the Company will have 86,259,763
ordinary shares in issue carrying voting rights. The Company has an
additional 99,662 ordinary shares held in Treasury. Following
Admission, this figure (86,259,763) may be used by shareholders as
the denominator for the calculations by which they will determine
if they are required to notify their interest in, or a change to
their interest in, the Company under the Financial Conduct
Authority's Disclosure Rules and Transparency Rules.
Current trading
The Company confirms that its current trading is in line with
market expectations after an encouraging start to the year.
Background to and reasons for the Acquisition
Jaywing's strategy is to create a low risk international growth
platform through the development and distribution of data
science-led products. Following its recent acquisition of
Australian based search marketing agency, Digital Massive Group
Pty, Jaywing has sought to broaden and enhance its product set,
which focuses on data science.
The Acquisition of Bloom is expected to accelerate the Company's
strategy and will provide Jaywing with a suite of innovative
digital products, including a social media and behavioural
analytics tool. The Acquisition also brings significant expertise
to the Company. Alex Craven, founder of Bloom, will remain employed
in the business and will be responsible for leading the development
of the Company's enlarged product set.
The Acquisition will increase Jaywing's scale in digital
marketing in the UK and is expected to provide opportunities to
cross-sell existing products and services into the Bloom client
base.
About Bloom
Bloom, based in Leeds, provides a range of digital marketing
services similar to those already provided by Jaywing and has
developed a suite of data science-led digital products ("Bloom
Intelligence") that it has sold into its client base and uses as
its primary vehicle for attracting new clients.
Bloom's products include 'Whisper', a real-time behavioural
insight tool for analysing social media data using algorithms
developed in association with Peter Grindrod CBE who is Professor
of Mathematics at the University of Oxford. Whisper has been used
by over 25 national and global brands in its most recent financial
year.
The Company's clients include a broad range of blue-chip
companies such as ADT, Anytime Fitness, Arco, Sky, Ebuyer, SIG and
Yorkshire Building Society. Bloom was founded in 2006 by Alex
Craven who will remain employed in the business going forward.
For the 12 months ended 29 February 2016, Bloom generated gross
profit and profit before tax of GBP1,943,000 and GBP279,000
respectively. As at 29 February 2016, Bloom had gross assets of
approximately GBP760,000*. Bloom's financial performance for the 12
months ended 29 February 2016 was impacted by an historic aborted
sale process and a subsequent restructuring of the business. During
its financial year ended 28 February 2015, Bloom generated gross
profit of GBP2,061,000 and profit before tax of GBP411,000*.
Bloom's performance for the first five months of the current period
is tracking ahead of this with gross profit of GBP1,149,000 and
profit before tax of GBP282,000.
* Based on Bloom's audited accounts. ** Based on unaudited
management accounts.
Placing Agreement
The Placing is not underwritten. The Placing Agreement contains
certain warranties and indemnities from the Company in favour of
Cenkos and is conditional, inter alia, upon Admission becoming
effective not later than 8.00 a.m. today or such later time and/or
date as the Company and Cenkos may agree, being not later than 15
September 2016.
Consideration and structuring
Jaywing has acquired the entire issued share capital of Bloom
for an upfront cash consideration of GBP2.41 million on a cash and
debt free basis. Additional earn-out consideration of up to GBP5.75
million is payable to the Vendors, subject to performance criteria,
over a two-year period ending 31 March 2018 and will be satisfied
through the Company's own cash resources and debt.
A new subsidiary company ("Newco"), of which Jaywing will own
75%, has been incorporated and into which Jaywing will make a
capital investment of GBP637,500 over a period of two years .
Certain of the Vendors, comprising certain of Bloom's existing
management team ("Bloom Management") will hold the remaining 25 per
cent., having transferred into Newco the suite of Bloom
Intelligence products. Newco will be led by Alex Craven who will be
responsible for developing and monetising all of Jaywing's data
science-led products..
Bloom Management will be granted a put option to sell their
stake to Jaywing for 2.0 times the average audited maintainable
EBITDA for the financial years ending March 2019 and March 2020
subject to a maximum of GBP4 million for the 25 per cent. stake.
Jaywing will also have a call option to acquire the 25 per cent.
stake under the same terms and the time period over which the
average EBITDA is taken may be moved further into the future by
mutual agreement. Jaywing may choose to pay up to 25 per cent. of
the additional consideration as shares.
Use of Proceeds
In addition to the GBP1 million of debt drawn, the proceeds of
the Placing will be used as follows:
-- GBP2.3 million upfront consideration for the Acquisition;
-- GBP0.7 million investment in Newco for product development;
-- GBP0.5 million on legal, accountancy and transactions costs; and
-- GBP0.5 million removal of extended temporary bank overdraft
for recent acquisition of Digital Massive.
Commenting on the deal, Martin Boddy, said: "This acquisition is
a fundamental building block in our strategy to distribute data
science-led products internationally. It gives us additional
products and an experienced individual to lead that part of our
business. Alex and his team are a great cultural fit and I'm
absolutely delighted to have them as part of the team."
Alex Craven, CEO at Bloom, added: "Jaywing's impressive data
science credentials and its product strategy are very exciting to
me personally. In addition, the breadth and scale of Jaywing's
client base as well as its recent acquisition in Australia provide
an ideal platform for the Bloom Intelligence suite. I look forward
to a rewarding future with Jaywing."
Enquiries:
Jaywing plc (www.jaywingplc.com)
Michael Sprot (Company Secretary) Tel: 0114 281 1200
Cenkos Securities plc
Nicholas Wells/Ivonne Cantú/Callum Davidson (Nomad) Tel: 0207 397 8920
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQAKDDBOBKDNFN
(END) Dow Jones Newswires
September 01, 2016 02:00 ET (06:00 GMT)
Jaywing (LSE:JWNG)
Historical Stock Chart
From Apr 2024 to May 2024
Jaywing (LSE:JWNG)
Historical Stock Chart
From May 2023 to May 2024