Perk.com Inc. (TSX:PER) (“Perk” or the
“Company”), a leading cloud-based mobile rewards platform
provider, today announced that it has signed an asset purchase
agreement (the “Agreement”) with Viggle Inc.
(“Viggle”) (NASDAQ:VGGL), a mobile and web-based
entertainment marketing platform.
Pursuant to the Agreement, Perk will purchase the rights to the
Viggle name and brand as well as the entirety of Viggle’s interests
in the Viggle App, a mobile and tablet application that uses
incentives to make content consumption and discovery more rewarding
for media companies, brands and consumers (the
“Acquisition”). Closing of the Acquisition is subject to
customary closing conditions and is expected to be completed in the
first quarter of 2016. Upon the closing of the Acquisition, the
Company will integrate the Viggle App’s existing sales team into
its operations and intends to continue operating Viggle’s New York
office location.
Launched in 2012, the Viggle App is an advertising platform that
works on mobile phones and tablets allowing users to earn rewards
by watching TV and listening to music. After downloading and
creating an account, consumers are able to play games along with TV
shows, share comments through social media, answer trivia questions
and discover more about the show. Users can also discover new music
through the app. The Viggle App reported revenues of approximately
USD $4 million for its fiscal first quarter 2016, ended September
30, 2015, and had over 10 million registered users as of this
date.
Strategic Rationale
Perk noted a number of key objectives during its IPO process,
such as establishing a direct advertising sales team which drives
increases in CPM and fill rates, increasing scale of its owned and
operated mobile user base which generates more available
advertising inventory and thereby increases revenue, and
establishing a broad third party app customer base. The acquisition
of Viggle’s App and rewards platform accomplishes a number of these
strategic objectives, including:
- Acquisition of an award-winning
cloud-based mobile rewards app with over 10 million registered
users;
- Addition of established direct ad-sales
team and access to relationships with several well-known brands
which will improve Perk’s CPM and fill rates;
- Larger Perk ecosystem with enhanced
scale creating a combined user base of over 20 million registered
users and over USD $50 million in rewards issued to users; and
- Strengthening Perk’s position in the
rewards market through its acquisition of the Viggle patent
portfolio.
Management Commentary –
Perk
Ted Hastings, Chief Executive Officer of Perk, stated: “Viggle
shares a similar vision as Perk of creating an interactive
environment that benefits both users and advertisers by rewarding
users for their daily activities. With the Viggle App, consumers
are introduced and guided to various forms of media while
advertisers are provided with a vehicle that delivers their message
directly to their target audiences. We feel the app will blend
seamlessly into our sphere of mobile applications and provide users
with greater options of quality content and reward benefits. We
view this transaction as an exciting opportunity not only for the
Company, but for our users, advertising partners, employees and our
shareholders. We look forward to keeping investors apprised of our
progress as we move towards closing.”
Management Commentary –
Viggle
Robert Sillerman, Chief Executive Officer and largest
shareholder of Viggle, commented: "We believe that this combination
is the next logical step in the evolution of digital reward
platforms by providing scale to compete with an expanding array of
online and mobile content available to users. We felt that by
aligning with a seasoned management team and successful operator
like Perk, that our shareholders will realize the full potential of
the Viggle App’s development. Both Viggle and Perk have a strong
commitment to their user base, and the integration of the Viggle
App to Perk’s rewards platform provides new opportunities to
further expand the market. In addition, our management team can
devote resources towards the continuing development of Viggle’s
existing suite of products. I am excited to partner with Perk in
the next chapter of our collective journey.”
Transaction Details
As consideration, Viggle will be entitled to receive:
- 1,500,000 Perk common shares (“Perk
Shares”) valued at approximately USD $4.7 million, based on the
closing price per Perk Share of CDN $4.30 (USD $3.13) on December
11, 2015, less 130,000 Perk Shares if Viggle elects to satisfy the
loan in Perk Shares, as described below;
- 2,000,000 Perk Shares if the Company’s
total revenues exceed USD $130.0 million for the year ended
December 31, 2016 or December 31, 2017 (the
“Earn-Out”);
- A warrant (“Warrant 1”)
entitling Viggle to purchase 1,000,000 Perk Shares at a strike
price of CDN $6.25 per Perk Share in the event the Perk Shares’
volume weighted average price (“VWAP”) is greater than or
equal to CDN $12.50 for 20 consecutive trading days in the two year
period following the closing of the Acquisition; and
- A warrant (“Warrant 2”, and
together with Warrant 1, the “Warrants”) entitling Viggle to
purchase 1,000,000 Perk Shares at a strike price of CDN $6.25 per
Perk Share in the event that the Perk Shares’ VWAP is greater than
or equal to CDN $18.75 for 20 consecutive trading days in the two
year period following the closing of the Acquisition.
Perk will also assume certain liabilities of Viggle, including
Viggle’s points liability.
In connection with the agreement, Perk has also agreed to loan
Viggle USD $1.0 million. The loan is repayable by Viggle upon close
of the transaction in either (i) cash or (ii) by reducing the
number of Perk Shares issued to Viggle on closing from 1,500,000 to
1,370,000.
On closing of the Acquisition, Viggle is expected to hold
approximately 7% of the issued and outstanding Perk Shares (after
giving effect to the Acquisition). Assuming Viggle’s exercise of
the Warrants and the vesting of the Earn-Out, Viggle may hold up to
22% of the issued and outstanding Perk Shares. Perk may issue Class
A Restricted Voting Shares of Perk to Viggle in lieu of Perk Shares
in connection with the Warrants and/or the Earn-Out.
The Acquisition has been unanimously approved by the board of
directors of Perk and Viggle. Beacon Securities Limited provided an
opinion to the board of directors of Perk that, as of the date of
the opinion and based on and subject to certain assumptions and
limitations set out therein, the consideration to be paid by Perk
pursuant to the Acquisition is fair, from a financial point of
view, to Perk.
The transaction is subject to the approval of the Toronto Stock
Exchange (the “TSX”). Assuming Viggle’s exercise of the
Warrants and the vesting of the Earn-Out, the maximum number of
Perk Shares issuable pursuant to the Acquisition is 5,500,000,
which, before giving effect to the Acquisition, represents 27.9% of
the currently issued and outstanding Perk Shares. Under TSX rules,
the Acquisition requires approval from the Perk shareholders by
majority vote since the number of Perk Shares issuable in
connection with the Acquisition may exceed 25% of the total number
of Perk Shares issued and outstanding (before giving effect to the
Acquisition) and Viggle may materially affect control of Perk. Perk
has obtained shareholder approval by written consent from
shareholders holding 61.5% of Perk's outstanding common shares.
Perk expects the TSX will accept this written consent supporting
the Acquisition and will not require Perk to hold a shareholder
meeting.
Pursuant to the terms of the Agreement, Viggle has agreed to
certain lock-up, transfer and voting provisions in respect of the
Perk Shares issued or issuable to it in connection with the
transaction. Viggle and Perk have also agreed to reciprocal
standstill provisions.
About Perk
As a leading mobile rewards platform, Perk brings together the
interests of consumers, advertisers, and publishers by offering
consumers rewards such as Perk Points and other digital goods. Perk
Points can be redeemed for gift cards, cash, or loaded on to Perk
Plastik, a re-loadable branded debit card. Perk works with brands
and publishers to reach consumers through truly engaging and
innovative formats using rewards as a way to achieve maximum
engagement of their brands and products.
Perk currently owns and operates 15 mobile applications that
allow members to earn rewards such as Perk Points and digital
goods. Perk also operates numerous websites as well as AppTrailers,
a leading mobile video rewards app. In addition to offering rewards
to members through its own mobile applications and websites, Perk
launched its Perk Platform, Appsaholic which allows mobile and
desktop publishers to utilize rewards to engage and entice users
through the publisher’s own applications and websites. The Perk
Platform was further expanded through the acquisitions of
SuperRewards, a rewards and alternative payments platform for
publishers and developers as well as Corona Labs, an app
development platform that allows developers to develop apps for
both iOS & Android.
Additional information about Perk can be found at its corporate
website: ir.perk.com.
About Viggle
Viggle is an entertainment marketing and rewards platform as
well as a fantasy sports provider that rewards its members for
watching TV shows, discovering new music and playing interactive
games. The Viggle Platform had an average monthly total reach of
18.6 million for the three months ended September 30, 2015,
including nearly 10 million Viggle registered users. Since its
launch, Viggle members have redeemed nearly USD $29 million in
rewards for watching their favorite TV programs and listening to
music. Members can use Viggle’s store, accessible through
Viggle.com, to redeem their Viggle Points for TV show, movie and
music downloads. Viggle operates Wetpaint, which offers
entertainment and celebrity news online; NextGuide, maker of
technology that helps consumers search for, find, and set reminders
for TV shows and movies; and Choose Digital, a digital marketplace
platform that allows companies to incorporate digital content into
existing rewards and loyalty programs in support of marketing and
sales initiatives. Viggle is also the largest shareholder of
DraftDay Gaming Group, the third-largest operator in the daily
fantasy sports industry, which offers Viggle members an exciting
and ever-growing selection of real-time fantasy sports games with
monetary rewards. For more information, visit www.viggle.com.
Cautionary Statement Regarding Forward
Looking Statements
This press release contains forward-looking statements,
including with respect to Perk’s business: the anticipated benefits
and costs of the Acquisition; the anticipated effect of the
Acquisition on Perk’s strategy, operations and financial
performance; the completion of and timing for completion of the
transaction; Perk’s ability to grow its active consumer base; 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 before and following the
Acquisition; 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 Appsaholic SDK; and Perk’s ability to
successfully enter new business areas and geographic markets,
including integration of the acquired business from Viggle; success
of new products developed by Perk and Perk’s ability to retain key
members of its management team. We do not undertake to update any
forward-looking statement, except as required by law.
There can be no assurance that the Acquisition will occur or
that the anticipated benefits and effects of the transaction will
be realized. The Acquisition is subject to approval of the
shareholders of Perk and Viggle and the fulfillment of certain
conditions and there can be no assurance that any such approvals
will be obtained and/or any such conditions will be met. The
Acquisition could be modified, restricted or terminated.
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version on businesswire.com: http://www.businesswire.com/news/home/20151214005637/en/
Perk.com Inc.Ted
HastingsChief Executive Officerted@perk.comorJeff CollinsChief
Financial Officerjeff@perk.comorInvestor Relations:The Equity Group Inc.Adam Prior,
212-836-9606Senior Vice Presidentaprior@equityny.comorTerry Downs,
212-836-9615Associatetdowns@equityny.com