TIDMRTHM
RNS Number : 7442D
RhythmOne PLC
02 February 2018
RHYTHMONE PLC SUCCESSFULLY COMPLETES EXCHANGE OFFER TO ACQUIRE
YUME, INC., ANNOUNCES DIRECTORATE CHANGES AND Q3 TRADING UPDATE
London, England and San Francisco, CA - 2 February 2018-
RhythmOne plc (LSE AIM: RTHM, "Company" or "RhythmOne"), a global
advertising technology company, is pleased to announce that the
tender offer to acquire the shares of common stock of YuMe, Inc.
("YuMe") pursuant to the terms of the acquisition agreement dated 4
September 2017 (the "Acquisition Agreement") has successfully
closed. RhythmOne will complete the acquisition of YuMe later today
through a merger (the "Merger") under Section 251(h) of the General
Corporation Law of the State of Delaware (the "DGCL").
The acquisition is expected to accelerate the Company's strategy
to build a unified programmatic platform with unique audiences of
differentiated quality at scale. Through YuMe, the Company gains
access to a leading data driven advertising platform, premium video
and connected TV inventory, unique consumer insights, cross-screen
targeting technology and established demand relationships.
The Company believes the acquisition will result in a combined
entity with financial scale and a complete end-to-end platform in
one of the fastest growing segments of the industry, with the
resources, relationships and talent to drive earnings growth - both
organically and through further potential acquisitions.
Exchange Offer Information
The exchange offer (the "Offer") to acquire all of the
outstanding shares of YuMe common stock, which was made through a
wholly-owned subsidiary of RhythmOne (the "Purchaser"), in exchange
for $1.70 in cash without interest and 0.7325 ordinary shares of
RhythmOne for each share of YuMe common stock ("YuMe Share"),
expired at one minute following 11:59 p.m. (Pacific time) on 1
February 2018.
The final prospectus in connection with the offer has been filed
and can be found at:
https://www.sec.gov/Archives/edgar/data/1713721/000119312518029311/d399085d424b3.htm.
The exchange agent for the Offer has informed RhythmOne that a
total of 26,122,350 YuMe Shares, representing approximately 74.4%
of issued and outstanding YuMe Shares as of the expiration of the
Offer, were validly tendered and not validly withdrawn pursuant to
the Offer. All YuMe Shares that were validly tendered and not
validly withdrawn in the Offer have been accepted for payment in
accordance with the terms of the Offer and applicable law.
Following its acceptance of the YuMe Shares tendered in the
Offer, RhythmOne intends to complete the Merger of Purchaser with
and into YuMe, with YuMe surviving the Merger and becoming a
wholly-owned subsidiary of RhythmOne. The Merger will be governed
under Section 251(h) of the DGCL and therefore no vote of YuMe's
stockholders will be required to consummate the Merger. Thereafter,
the surviving corporation will merge with and into another
wholly-owned RhythmOne subsidiary with such other subsidiary
continuing as the surviving corporation. All YuMe Shares not
validly tendered into and accepted in the Offer, other than YuMe
Shares held by YuMe in treasury or by YuMe stockholders who have
validly exercised their appraisal rights under the DGCL, will be
cancelled and converted into the right to receive the same
consideration received for each YuMe Share accepted in the Offer.
YuMe Shares will cease to be traded on the New York Stock
Exchange.
Commenting on the acquisition, Ted Hastings, CEO of RhythmOne,
said:
"We are glad to welcome YuMe into the RhythmOne family. In
addition to a tenured leadership team and strong demand
relationships, YuMe brings premium video and connected TV
inventory, unique customer insights and cross-screen targeting
technology - all of which are expected to augment our unified
programmatic platform and accelerate growth of the combined
enterprise. Through the acquisition, RhythmOne anticipates material
synergies that would drive real value for our shareholders."
Commenting on the acquisition, Paul Porrini, CEO of YuMe,
said:
"We are proud of the business we have built and the strength of
the relationships we have cultivated. Our robust technology
platform and legacy of video innovation combined with RhythmOne's
supply scale and unified programmatic marketplace, creates one of
the largest and most effective platforms for digital advertising
available to advertisers today. I am enthusiastic about the
opportunities this will bring to both our customers and our
shareholders, and believe that this transaction will usher in the
next chapter of growth and prosperity for the company."
Admission of the Consideration Shares
Each person who held shares of YuMe common stock as of
immediately prior to the expiration time of the Offer (other than
holders who have validly asserted appraisal rights under the
Delaware General Corporation Law) will receive US$1.70 in cash and
0.7325 ordinary share of GBP0.10 each in the capital of the Company
("the Consideration Shares") for every YuMe share held (being the
"Transaction Consideration") pursuant to the terms of the
Acquisition Agreement.
An application has been made to the London Stock Exchange for
the admission of an additional 26,048,596 ordinary shares of
GBP0.10 each in the capital of the Company to trading on AIM
resulting from the acquisition. Admission is expected to take place
at 8.00 a.m. (London time) on 2 February 2018.
Following the anticipated admission of the Consideration Shares,
the total issued share capital of the Company will be 77,473,519
ordinary shares of GBP0.10 per share, each with one voting right.
There are no Treasury shares in the Company.
The above figure 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, RhythmOne.
Appointments of new non-executive directors
As stated on 4 September 2017 and pursuant to the terms of the
Acquisition Agreement, the Company is pleased to announce that Mr.
Eric Singer and Mr. John Mutch will be appointed as Non-Executive
Directors of RhythmOne, effective as of the expected completion of
the Merger. Mr. Singer will also become the Company's Chairman
pursuant to the terms of the Acquisition Agreement and Mr. Raj
Chellaraj will step down as the current Chairman, although he will
maintain his position as a Non-Executive Director of the Company.
Their details, as required to be disclosed pursuant to Schedule 2
paragraph (g) of the AIM Rules are set out at the end of this
announcement.
"Both Eric and John bring highly relevant corporate development,
finance and operational skills and experience to the RhythmOne
Board, which will be critical as our business continues to evolve
within a competitive and dynamic industry landscape," said Ted
Hastings, CEO, RhythmOne. "Their leadership will help to accelerate
RhythmOne's goal of becoming one of the dominant, video-led
programmatic platforms in the industry. We are thrilled to welcome
both Eric and John to the Board."
Resignation of existing directors
The Company also announces that Suranga Chandratillake OBE and
Andrea Cunningham will resign as Non-Executive Directors of the
Company, effective as of the completion of the expected Merger.
Ted Hastings, CEO of RhythmOne, said:
"On behalf of the entire board of directors of RhythmOne, I
would like to thank both Suranga and Andrea for their respective
contributions to the success of the Company, and their input and
commitment as directors. Suranga founded the Company in 2004 and,
as CEO, led the spin-out from Autonomy Corporation plc in 2007,
shifting to a Non-Executive Director role in 2012. Andrea has been
a board member since 2016 and served as a member of the Nomination
and Remuneration Committees."
Q3 2018 Trading Update
RhythmOne plc today updates the market on its performance for
the third quarter of financial year 2018, covering the period from
1 October 2017 to 31 December 2017 ("Q3 2018" or "the Period").
Financials
RhythmOne's Q3 2018 financial performance was in line with
management expectations. During the Period, the Company continued
to successfully execute against the three key objectives
communicated at the start of the financial year:
-- Growth of on-platform programmatic revenues;
-- Integration of key strategic acquisitions; and
-- Continued profitability on an adjusted(1) EBITDA basis.
During the seasonally strongest quarter of the financial year,
the Company experienced growth in both topline revenue and
profitability on an adjusted(1) EBITDA basis, compared with the
same period last year. Performance was led by on-platform
programmatic revenue growth, which saw an increase of approximately
13% year-on-year.
Operations
The Company continued to focus on the integration of recent
acquisitions and incorporated legacy RadiumOne data assets and
analytics tools onto its platform, providing additional ways to
package high-value inventory for advertisers. As a result of these
efforts and ongoing platform enhancements, Q3 2018 saw a
significant rise in the Company's operating metrics across various
categories.
Platform volume grew by 35% year-on-year, as the Company
integrated additional quality supply sources. Over the last 12
months, the Company shifted the balance of volume in favor of
mobile supply - in line with trends in advertiser spend. Fill rate
grew by 17% year-on-year, demonstrating increased demand for
RhythmOne supply, and inventory saw a strong year-on-year increase
in pricing of 20%, driven by monetization of high-value,
high-impact and high-margin video and rich media inventory, and the
packaging of premium supply through turnkey private marketplaces.
Key operating metrics are outlined below:
Metric Q1 2017 Q2 2017 Q3 2017 Q1 2018 Q2 2018 Q3 2018
---------------- -------- ------- ------- ------- ------- ------- -------
Volume Billions 3,515.5 3,953.9 6,101.4 7,817.4 8,933.0 8,263.8
---------------- -------- ------- ------- ------- ------- ------- -------
Desktop(2) % 50.0 52.5 48.8 36.0 41.2 42.1
---------------- -------- ------- ------- ------- ------- ------- -------
Mobile(2) % 50.0 47.5 51.2 64.1 58.8 58.0
---------------- -------- ------- ------- ------- ------- ------- -------
Fill Rate(3) % 0.52 0.64 0.30 0.20 0.30 0.35
---------------- -------- ------- ------- ------- ------- ------- -------
Price(4) $/CPM 1.70 1.42 2.26 2.86 2.58 2.71
---------------- -------- ------- ------- ------- ------- ------- -------
Outlook
Ted Hastings, CEO of RhythmOne, said:
"We are pleased with the results we achieved during the period,
demonstrating progress against our targets in terms of revenue
growth, profitability and product integration. Strategically, we
expect our programmatic platform to serve as the Company's
principal growth driver, reinforced by significant scale of quality
supply, cutting edge technology and unique, data-driven targeting
capabilities. Further, we will maintain strong cost discipline,
driving efficiency within the Company with the aim of sustained
profitability."
The information communicated herein constitutes inside
information.
Mr. Eric Singer
Mr. Eric Singer, aged 44, brings extensive business, corporate
development and financial experience across various industries, and
was instrumental in helping to negotiate the YuMe transaction with
RhythmOne. He has several years of experience as a director on
multiple boards, including as the Chairman of the Board of YuMe
since May 2016. Eric currently serves on the boards of Quantum
Corp., a provider of data storage solutions, and Support.com, Inc.,
a provider of cloud-based software and services. Since May 2014,
Eric has served as the managing member of each of VIEX GP, VSO GP
II, and VIEX Capital Advisors, LLC. Previously, Eric held various
positions at Potomac Capital Management II and Potomac Capital
Management III, and its related entities, and was a senior
investment analyst at Riley Investment Management, LLC and before
that, he managed private portfolios for Alpine Resources, LLC. Eric
holds a B.A. in American Studies from Brandeis University and
resides in New York.
Eric currently holds, and has held during the last five years
immediately preceding the date of this announcement the following
directorships or partnerships:
Current Directorships Directorships in the Past
Five Years
------------------------------ -----------------------------------
YuMe Inc. (NYSE: YUME) Sigma Designs, Inc. (NASDAQ:
- Chairman of the Board, SIGM) - Director (August
Director - June 2016-Present 2012-January 2013); Chairman
(January 2013-December
2013)
------------------------------ -----------------------------------
Support.com Inc. (NASDAQ: PLX Technology, Inc. (now
SPRT) - Director - June Broadcom Ltd. NASDAQ:
2016-Present AVGO) - Director (December
2013-August 2014)
------------------------------ -----------------------------------
Quantum Corp. (NYSE: Meru Networks, Inc. (now
QTM) - Director - November Fortinet Inc. NASDAQ:FTNT)-
2017-Present Director (January 2014-Janaury
2015)
------------------------------ -----------------------------------
Tigerlogic Corporation
- Director (January 2015-December
2016)
------------------------------ -----------------------------------
IEC Electronics Corporation
(NYSE American: ICE)-
Director (February 2015-August
2017)
------------------------------ -----------------------------------
Numerex Corporation (Now
Sierra Wireless, Inc.
NASDAQ: SWIR), - Director
(March 2016-December 2017)
------------------------------ -----------------------------------
Eric has a beneficial interest in 4,057,325 ordinary shares of
GBP0.10 each in the Company, representing approximately 5 per cent.
of the issued share capital following admission of the
Consideration Shares.
Mr. John Mutch
Mr. John Mutch, aged 61, brings extensive business, corporate
leadership and financial expertise across various industries,
including experience serving as chief executive officer of several
companies within the software and IT industries. John served on the
YuMe board of directors since July 2017. From 2008 to 2017, John
served as the President, Chief Executive Officer and Chairman of
the Board of BeyondTrust Software, a privately held security
software company focused on privilege identity management solutions
sold into the Global 2000 IT infrastructure market. Currently, he
is managing partner and founder of MV Advisors, LLC, a strategic
block investment firm. In addition, he is a member of the board of
directors of Maxwell Technologies, Inc., an energy storage and
power delivery solutions company, the chairman of the board of
Aviat Networks, Inc., a global supplier of microwave networking
solutions and a member of the board of directors of Agilysys
Networks, Inc., a provider of hospitality software and solutions.
John holds a B.S. in Applied Economics from Cornell University and
an M.B.A. from the University of Chicago and resides in Ranch Sante
Fe, California.
Current Directorships Directorships in the Past
Five Years
-------------------------------- -------------------------------
YuMe, Inc. (NYSE: YUME) BeyondTrust Software Inc.
- Director - July 2017-Present - President, CEO and Chairman
of the Board (2008-2014)
-------------------------------- -------------------------------
MV Advisors, LLC - Founder Steel Excel Inc. - Director
and Managing Partner (March 2008-February 2016)
(2005-Present)
-------------------------------- -------------------------------
Agilysis, Inc. (NASDAQ: Quantum Corporation (NYSE:
AGYS) - Director (March QTM) - Director (April
2009-Present) 2017-May 2017)
-------------------------------- -------------------------------
Aviat Networks, Inc. Peregrine Systems, Inc.
(NASDAQ: AVNW)- Chairman (now Hewlett Packard NYSE:
of the Board (January HPE)- President, CEO and
2015-Present) Director (July 2003-December
2005)
-------------------------------- -------------------------------
Maxwell Technologies, HNC Software Inc. (now
Inc. (NASDAQ: MXWL) FICO NYSE:FICO) - President,
CEO and Director (July
1997-August 2003)
-------------------------------- -------------------------------
John has a beneficial interest in 15,294 ordinary shares of
GBP0.10 each in the Company, representing less than 1 per cent. of
the issued share capital following admission of the Consideration
Shares.
RhythmOne confirms there is no other information required to be
disclosed pursuant to Schedule 2 paragraph (g) of the AIM
Rules.
Notes:
1. This press release contains references to adjusted EBITDA.
This financial measure does not have any standardized meaning
prescribed by IFRS and is therefore referred to as non-GAAP
measures. This non-GAAP measure used by RhythmOne may not be
comparable to similar measures used by other companies. Adjusted
EBITDA is defined as loss for the period, adjusted to exclude
finance income and expense, taxation, depreciation and
amortization, share based payments and exceptional items in
continuing operations and in discontinued operations, which include
goodwill impairment, change in intangible assets' lives,
acquisition-related costs, restructuring and severance costs, fair
value adjustments and unrealized foreign exchange gain and
loss.
2. Volume of transactions (ad requests) processed through the
platform. Volumes are continuously optimized for performance and
yield.
3. Proportion of the transaction volume monetized, which is
impacted by seasonality and fluctuations in demand and supply.
4. Average price across all ad formats, expressed as Cost per Mille or Thousand Impressions.
About RhythmOne
RhythmOne provides streamlined, transparent connections between
advertisers and audiences through a combination of differentiated
supply, innovative technology and data-driven insights. Founded in
2004 in the UK, the Company pioneered Internet video search and
works with digital advertisers, publishers and content providers to
offer fully integrated, cross-screen solutions that span desktop
and mobile video, rich media, display, social and native
advertising. Through its fully integrated programmatic platform,
RhythmMax, the Company represents digital advertising inventory
across owned, controlled and extended supply sources. The RhythmMax
platform includes unique brand safety technology, RhythmGuard,
which combines leading third-party verification and proprietary
filtering technologies to ensure inventory quality in brand safe
environments. RhythmOne's end-to-end platform provides more direct,
efficient and effective connections, driving ROI for advertisers
and publishers. The Company is headquartered in San Francisco,
United States with offices in the US, UK, Europe, APAC and Canada.
For more information, please visit www.rhythmone.com.
Analyst and Investor Contact
Dan Slivjanovski
RhythmOne plc
Financial Media Contacts
Edward Bridges / Dwight Burden
FTI Consulting LLP
(UK) 020 3727 1000
Nomad and Broker for RhythmOne
Nick Westlake (Nomad) / Michael Wharton / Toby Adcock
Numis Securities Limited
(UK) 020 7260 1000
Numis Securities Limited ("Numis"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority
is acting for the Company and no one else as nominated advisor and
UK broker and financial advisor only and will not afford the
protections afforded to clients of Numis to any other person. To
the fullest extent permitted by law Numis expressly disclaims any
liability whatsoever arising out its role and/or of the contents of
this announcement to any person other than the Company.
Forward-Looking Statements
This announcement contains (or may contain) certain
forward-looking statements with respect to the YuMe acquisition,
the Offer, the benefits and synergies associated with the
acquisition, future opportunities for the combined company and
certain of RhythmOne's, YuMe's or the combined company's future
expectations, beliefs, plans, objective, financial conditions,
assumptions or future events or performance and which involve a
number of risks and uncertainties. RhythmOne cautions readers that
no forward-looking statement is a guarantee of future performance
and that actual results could differ materially from those
contained in the forward-looking statements. These forward-looking
statements can be identified by the fact that they do not relate
only to historical or current facts. Forward-looking statements are
often, but not always, made through the use of words or phrases
such as "anticipate," "believe," "could," "estimate," "intend,"
"may," "outlook," "plan," "positioned, " "potential," "predict,"
"project," "should," "strategy," will," "would" and similar
expressions.
All such forward-looking statements involve estimates and
assumptions that are subject to risks, uncertainties and other
factors that could cause actual future financial condition,
performance and results to differ materially from the plans, goals,
expectations and results expressed in the forward-looking
statements. Among the key factors that could have an adverse effect
on the results of operations, cash flows and financial position of
the combined company and any anticipated benefits of the
Acquisition, and that could cause actual results to differ
materially from those projected in the forward-looking statements,
are the growth and prospects of the digital advertising industry,
forecasts regarding internet usage and advertising spend, projected
levels of growth in RhythmOne's markets, RhythmOne's expectations
about the factors that drive business, RhythmOne's investments in
international and emerging market and sectors, anticipated trends
and challenges in RhythmOne's industry, including but not limited
to the increasing quantity, variety and fragmentation of digital
video content, platforms, distribution channels and technologies,
the expansion of the digital media advertising market in general
and the digital video advertising market in particular, RhythmOne's
operating results, including revenue, cost of revenue, expenses and
liquidity, RhythmOne's strategy and competition, market trends,
including overall opportunities for digital media advertising and
shifting advertising budget, the ongoing improvement and refinement
of RhythmOne's data-science capabilities, developments in the
regulatory framework applicable to RhythmOne's business, and
RhythmOne's intellectual property and proprietary technologies.
All forward-looking statements attributable to RhythmOne or
YuMe, or persons acting on their behalf, are expressly qualified in
their entirety by the cautionary statements set out herein. Undue
reliance should not be placed on such statements, which speak only
as of the date they are made. Such factors include, but are not
limited to: adverse fluctuations in foreign currency exchange
rates; RhythmOne's ability to implement and achieve its business
strategies successfully; and other factors that are set out in
"Risk Factors" of the prospectus/offer to exchange relating to the
Offer and in the documents incorporated by reference such
prospectus/offer to exchange, including those in the section "Risk
Factors" in YuMe's Annual Report on Form 10-K for the year ended
December 31, 2016 and YuMe's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2017. Additional factors could cause
actual results to differ materially from those in the
forward-looking statements. Subject to compliance with applicable
laws and regulations of the relevant stock exchanges, RhythmOne
disclaims any intention or obligation to update or revise any
forward-looking statements and undertakes no obligation to release
publicly the results of any future revisions to the forward-looking
statements to reflect events or circumstances after the date hereof
or to reflect the occurrence of unanticipated events.
Additional Information and Where to Find It
This communication relates to a business combination transaction
between RhythmOne and YuMe. This communication is for informational
purposes only and is neither an offer to sell or exchange, nor a
solicitation of an offer to buy or exchange, any securities, nor
shall there be any sale of securities in any jurisdiction in which
such offer, sale or exchange would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction.
RhythmOne has filed a registration statement on Form F-4 related
to the transaction with the SEC and may file amendments thereto,
including the amendment filed on 29 January 2018. RhythmOne and a
wholly-owned subsidiary of RhythmOne filed on 5 January 2017 a
tender offer statement on Schedule TO (including a prospectus/offer
to exchange, a related letter of transmittal and other exchange
offer documents) related to the transaction with the SEC and may
file amendments thereto, including the amendment filed on 29
January 2018. YuMe has filed a solicitation/recommendation
statement on Schedule 14D-9 with the SEC and may file amendments
thereto. RhythmOne and YuMe may also file other documents with the
SEC regarding the transaction. This communication is not a
substitute for any registration statement, Schedule TO, Schedule
14D-9 or any other document which RhythmOne or YuMe has filed or
may file with the SEC in connection with the transaction. Investors
and security holders are urged to read the registration statement,
the Schedule TO (including the prospectus/offer to exchange,
related letter of transmittal and other exchange offer documents),
the solicitation/recommendation statement on Schedule 14D-9 and the
other relevant materials with respect to the transaction carefully
and in their entirety before making any decision regarding
exchanging their shares, because they contain important information
about the transaction. The prospectus/offer to exchange, the
related letter of transmittal and certain other exchange offer
documents, as well as the solicitation/recommendation statement,
will be made available to all holders of YuMe stock at no expense
to them. The exchange offer materials and the
solicitation/recommendation statement are available for free at the
SEC's website at www.sec.gov. Additional copies of the exchange
offer materials and the solicitation/recommendation statement may
be obtained for free from RhythmOne by contacting RhythmOne's
investor relations department at Edward Bridges, FTI Consulting,
Inc., Tel: +44 (0)20 3727 1000, Email: rhythmone@fticonsulting.com.
Additional copies of the solicitation/recommendation statement may
be obtained for free by contacting YuMe's investor relations
department at ir@yume.com or +1-650-503-7192.
In addition to the SEC filings made in connection with the
transaction, YuMe files annual, quarterly and current reports and
other information with the SEC. You may read and copy any reports
or other such filed information at the SEC public reference room at
100 F Street, N.E., Washington, D.C. 20549, United States of
America. Please call the SEC at +1 800 732 0330 for further
information on the public reference room. YuMe's filings with the
SEC are also available to the public from commercial
document-retrieval services and at http://www.sec.gov. In addition
to the SEC filings made in connection with the transaction,
RhythmOne makes available annual reports and other information free
of charge on its website at www.RhythmOne.com. Such information can
also be obtained from RhythmOne using the contact information
above.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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