[December 05, 2016] |
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Perk Inc. to be Acquired by RhythmOne PLC
Perk Inc. (TSX:PER) ("Perk" or "the Company") is pleased to
announce that it has entered into a definitive agreement (the "Agreement")
with RhythmOne PLC ("RhythmOne") (LSE AIM: RTHM), pursuant to
which RhythmOne has agreed to acquire all of the issued and outstanding
Common and Class A Restricted voting shares of Perk (the "Perk Shares")
by way of plan of arrangement in an all-stock transaction (the "Transaction")
valued at approximately US$42.5 million.
"We are pleased to announce this transaction, which will deliver a
significant premium for Perk shareholders and yield an investment in a
larger-scale digital media company with enhanced stock liquidity,"
commented Ted Hastings, Chief Executive Officer of Perk. "Founded in
2004, RhythmOne is a leader in the technology-enabled advertising
market. RhythmOne's revenue for the fiscal year ended March 31, 2016 was
US$166.7 million. It has a strong, debt-free balance sheet, including
over US$69 million in cash and marketable securities as at September 30,
2016. At Perk, we have built a large and engaged mobile audience and we
have been evaluating options to accelerate growth and scale. We
anticipate the combined operations will drive higher fill rates and CPM
for Perk's advertising inventory over the long-term, which will be
unique and highly complementary to RhythmOne's industry-leading
programmatic trading platform. This transaction improves our overall
scale of operations, advertiser reach, balance sheet and stock
liquidity, while providing a material premium to Perk shareholders. We
are confident in the synergies that will stem from this transaction, and
we look forward to joining the RhythmOne team to continue our growth
trajectory."
Strategic Rationale
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Premium to Perk Shareholders: Upon completion of the
Acquisition and exercise of Perk's employee options, each Perk Share
will be exchanged for 4.5116 RhythmOne shares. Using a CAD/GBP
exchange rate of 1.6868 on 2 December 2016, the value of the
consideration to be received by Perk shareholders based on RhythmOne's
30-day VWAP of £0.381 per share will be approximately C$2.90 per Perk
Share, representing a premium of 11.5% to Perk's closing price of
C$2.60 on 2 December 2016, and a premium of 43.6% to Perk's 30-day
VWAP of C$2.02.
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Greater Scale: Perk will benefit from additional scale through
RhythmOne's established programmatic platform, RhythmMax. The
Transaction will give Perk access to over 600 brands, 441 million
global unique users and relationships with over 900 professional
publishers.
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Improved Competitive Positioning: The Transaction improves the
competitiveness of both companies on the supply and demand side.
Perk's highly engaged and verifiable audience will attract new and
repeat demand partners to RhythmOne's platform, driving higher fill
rates and pricing for both companies.
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Revenue and Cost Synergies: The complementary product offerings
of Perk and RhythmOne are expected to enhance the combined company's
ability to further penetrate its core target market and enable the
delivery of an enhanced digital advertising platform. The Transaction
creates a company with a more diversified customer base, higher
quality revenue and EBITDA and significant opportunities for revenue
and cost synergies.
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Greater Liquidity Profile for Shareholders: Upon completion of
the Transaction, Perk Shareholders will benefit from RhythmOne's
improved liquidity profile on the London Stock Exchange's Alternative
Investment Market.
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Expanded Leadership Team: Ted Hastings, Perk's Chief Executive
Officer, together with Perk's senior management team will join
RhythmOne upon completion of the Transaction. Perk's long track record
of success in building, managing and profitably scaling B2C web
properties and apps will directly complement RhythmOne's expertise in
building and managing B2B Ad Tech businesses, while also providing
scale and infrastructure to help accelerate growth.
The Board of Directors of Perk and RhythmOne have unanimously approved
the Transaction and have determined that the Transaction is in the best
interest of the respective companies.
Transaction Details
Pursuant to the terms of the Agreement, holders of Perk Shares will be
entitled to receive 4.5116 RhythmOne common shares for each Perk Share
held. Based on RhythmOne's 30-day VWAP of £0.381 per share as of
December 2, 2016, the Transaction is valued at approximately US$42.5
million. This represents a consideration of C$2.90 per Perk Share and a
premium of 11.5% to Perk's closing price on December 2, 2016, and a
premium of 43.6% to Perk's 30-day VWAP ending on December 2, 2016. Upon
completion of the Transaction, Perk will become a wholly-owned
subsidiary of RhythmOne.
The Agreement provides that Perk may consider and accept unsolicited
superior proposals, subject to a termination fee payable to RhythmOne
and a right for RhythmOne to match any superior proposals.
Perk's Board of Directors and senior management, and AVG Ventures, LP,
representing, in aggregate, approximately 39% of outstanding Perk
Shares, have entered into customary voting and support agreements,
pursuant to which they have agreed to vote their Perk Shares in favor of
the Transaction.
The Transaction will be conducted by way of plan of arrangement under
the Business Corporations Act (Ontario) and will require the
approval of no less than 66 2/3% of the votes cast at a special meeting
of Perk securityholders that is expected to be held in mid-January 2017.
In addition to the approval of Perk securityholders, closing of the
Transaction is subject to the satisfaction of certain closing conditions
customary for transactions of this nature. RhythmOne shareholders have
preauthorized the issuance of the required shares needed to complete the
Transaction.
Additional details of the Transaction will be provided to Perk
securityholders in an information circular to be mailed in mid-December,
2016.
Financial and Legal Advisors
Beacon Securities Limited is acting as exclusive financial advisor to
Perk and has provided an opinion to Perk's Board of Directors to the
effect that, as of December 4, 2016 and subject to the assumptions,
limitations and qualifications set forth therein, the consideration to
be received by Perk shareholders pursuant to the Transaction is fair,
from a financial point of view, to such Perk shareholders. Torys LLP is
acting as legal counsel for Perk in connection with the Transaction.
Cormark Securities Inc. is acting as financial advisor to RhythmOne and
DLA Piper (Canada) LLP is acting as legal counsel to RhythmOne in
connection with the Transaction.
Conference Call
Perk and RhythmOne will be hosting separate conference calls to discuss
the Transaction.
RhythmOne hosted a webcast at 8.30am GMT; 3:30am EST on December 5,
2016. A replay of the webcast can be found at on RhythmOne's website at https://investor.rhythmone.com/.
Perk will be hosting a conference call later this morning at 8:30 am EST
on December 5, 2016.
The dial-in numbers are:
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Live Participant Dial-In (Toll-Free US & Canada):
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877-407-9711
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Live Participant Dial-In (International):
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412-902-1014
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To listen to the live webcast, please go to ir.perk.com
and click on the conference call link at the top of the page, or go to: http://perk.equisolvewebcast.com/transaction.
A copy of the presentation can be found on RhythmOne's website at https://investor.rhythmone.com/
or Perk's website at http://ir.perk.com/.
About Perk
Perk's Rewarded Engagement Platform brings together the interests of
advertisers and consumers to deliver profound insights and actionable
results. With Perk, brands form deep connections with consumers to
achieve greater engagement, loyalty, and conversion. Perk's insights and
intelligence solution, Perk IQ™, allows brands to measure performance
and uncover valuable data around advertising attribution, brand impact,
and purchase behavior.
Additional information about Perk Inc. can be found at the Company's
corporate website: http://www.ir.perk.com.
About RhythmOne
RhythmOne is a technology-enabled digital media company that connects
online audiences with brands through premium content across devices.
Founded in 2004, RhythmOne 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, and content
formats. Through its fully integrated programmatic platform, RhythmMax,
RhythmOne 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 goal is
to maximize the return on advertising spend and provide the most
efficient and effective marketplace for digital advertising. RhythmOne
is headquartered in San Francisco, California with offices in the US, UK
and Canada. For more information, please visit www.rhythmone.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release may contain forward-looking statements, including
which may relate to, but which may not be limited to, Perk's business;
Perk's strategy, operations and financial performance; Perk's user and
advertiser engagement; Perk's ability to establish new marketing
partnerships; Perk's ability to expand into new markets; and Perk's
ability to acquire and integrate new businesses and technologies. Such
forward-looking statements reflect Perk's expectations about its future
operating results, performance and opportunities that involve
substantial risks and uncertainties. When used herein, the words
"anticipate", "believe", "estimate", "upcoming", "plan", "target",
"intend" and "expect" and similar expressions, as they relate to Perk or
its management, are intended to identify such forward-looking
statements. These forward-looking statements are based on information
currently available to Perk and are subject to a number of risks,
uncertainties, and other factors that could cause Perk's actual results,
performance, prospects, and opportunities to differ materially from
those expressed in, or implied by, these forward-looking statements,
including, but not limited to: maintenance by Perk of relationships with
advertising network providers and partners; successful development of
the "Perk" brand; Perk's ability to keep up with rapid technology
developments in Perk's markets; Perk's ability to avoid defects in
products and services delivered by Perk; Perk's ability to attract app
and website developers to its SDK's; Perk's ability to successfully
enter new business areas and geographic markets; and the success of new
products developed by Perk; Perk's ability to retain key members of its
management team. Perk does not undertake to update any forward-looking
statement, except as required by law.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161204005092/en/
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