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team internet group plc (LON:TIG) has announced that it has entered into a definitive agreement to acquire the entire issued share capital of Shinez IO Ltd, a leading online marketing business, and its subsidiaries from its current shareholders.
Business summary
Shinez specializes in creating and promoting engaging content across a variety of channels including social media, search engines, and native networks. Currently, its 40 popular portals include ourfashiontrends.com, falafelandcaviar.com and travelerdreams.com. Shinez leverages this expertise, leveraging cutting-edge technology and strategies to monetize real-time visits through an extensive network of ad exchanges. This approach maximizes the revenue potential of each piece of content and puts Shinez at the forefront of digital marketing innovation.
Acquisition conditions
Team Internet acquires Shinez for an enterprise value of $41.8 million. On a net debt-free basis, customary adjustments for net working capital paid in cash apply.
The initial consideration represents 4.0 times Shinez’s FY23 Adjusted EBITDA. Additional contingent consideration of up to US$12.3 million will be paid in cash, subject to Shinez achieving ambitious financial targets over the next two years.
pro forma impact
Shinez reported gross revenues of $111 million, net revenues of $17.2 million and adjusted EBITDA of $10.4 million for the year ended December 31, 2023. Post-acquisition, his 2023 unaudited pro forma financial statements for the enlarged group show estimated gross and net revenues. Adjusted EBITDA was approximately $948 million, $208 million and $107 million, respectively. Additionally, the acquisition is expected to be significantly accretive to earnings per share (EPS), with FY2023 adjusted EPS growth expected to be in the low single-digit percentage range, not taking into account potential synergies. will be done.
funding
The acquisition will be funded through a combination of cash on hand and a revolving credit facility agreement.
US$4.6 million, representing 11% of the company’s value, will be held in escrow for four years to cover customary warranties and indemnification. A phased release schedule is planned for escrow, with up to 50% released on the second anniversary of the closing, followed by up to 25% each on his third and fourth anniversary.
strategic benefits
· Diversification: Shinez’s unique content creation and syndication capabilities are complemented by a balanced mix of organic and paid content promotion strategies to create profitable yet well-served segments such as lifestyle, food, and travel. We are expanding our scope into areas where there is no. This strategic expansion not only diversifies our portfolio, but also unlocks new advertiser budgets and significantly expands our total addressable market (TAM).
· Decreased monetization network concentration: The strategic acquisition of Shinez marks a significant shift in the focus of our monetization network. On a pro forma basis for fiscal year 2023, this acquisition will more than double the online marketing segment’s revenue generated independently from Tier 1 channel partners. Specifically, the independent revenue share of this segment will increase significantly from 15% to 27%. At group level, independent revenue increases from 33% to 41%.
· Enhanced features: Combining Shinez’s media buying, content creation and campaign optimization expertise with TIG’s existing expertise will significantly strengthen our business model.
· Synergy opportunities: Significant growth and revenue synergies are expected, including mutual cross-selling between Shinez and TONIC’s publisher bases and deeper vertical integration with major networks, particularly Meta.
Completion schedule
The acquisition is expected to close by late April to early May 2024, subject to the satisfaction of all closing conditions, with initial full integration occurring in the third quarter of 2024.
CEO’s perspective
CEO Michael Riedl commented:
“This acquisition is a pivotal transformation for Team Internet Group and will work seamlessly with our innovative OM.2 Vision – omnimedia, omnimonetization. Our vision is to establish a versatile platform that expertly guides Internet users across diverse media environments (omnimedia) and towards the most effective means of monetization (omni-monetization). 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 Team Internet Group. ”
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