TIDMCAU
RNS Number : 3878K
Centaur Media PLC
07 July 2017
7th July 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN, INTO, OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT
JURISDICTION
Centaur Media Plc
Proposed Disposal of Home Interest Business for GBP32
million
and Proposed Acquisition of MarketMakers for initial
consideration of GBP13.4 million
Transactions will accelerate Group's transformation to B2B
focus
Introduction
Centaur Media Plc (LSE: CAU) ("Centaur" or the "Group"), the
business to business information, insight and events group is
pleased to announce that it has entered into conditional agreements
for both the disposal (the "Disposal") of its business-to-consumer
("B2C") division, Home Interest for an enterprise value of GBP32
million to Future plc (the "Home Interest Business") and the
acquisition (the "Acquisition") of MarketMakers Incorporated
Limited ("MarketMakers"), one of the UK's leading integrated
marketing services businesses for an initial consideration of
GBP13.4 million with a deferred earnout amount based on EBITDA
performance, further details of which are set out later in this
announcement (together the "Transactions").
The net proceeds from the Disposal will be used in part to
provide all of the consideration for the Acquisition. As a result,
completion of the Acquisition is conditional, inter alia, upon
completion of the Disposal.
The Disposal and the Acquisition are each of sufficient size to
constitute Class 1 transactions under the Listing Rules and are
both therefore conditional on, inter alia, the approval of the
Group's shareholders at a general meeting of the Company. The
shareholder circular convening the general meeting and setting out
further details on and the rational for the Transactions is
expected to be published and posted to shareholders later today.
The Company will make a further announcement once the circular has
been published which will include details of where the circular
will be available from.
The Company has received irrevocable undertakings from certain
shareholders to vote in favour of the Transactions in respect of
49,555,987 ordinary shares, representing approximately 34.29 per
cent of Centaur's issued share capital and non-binding letters of
intent to vote in favour of the Transactions in respect of
21,360,630 ordinary shares, representing approximately 14.78 per
cent of Centaur's issued share capital.
Highlights
-- Transactions accelerate Centaur's transformation to B2B focus
-- Disposal of Home Interest Business for enterprise value of
GBP32.0 million (GBP30.24 million in cash) to Future plc following
previously announced sale process
-- Disposal will allow the Group to further focus itself as a
B2B digital, business intelligence and events media group offering
additional products and services to its professional customer
base
-- Net proceeds from the Disposal of GBP28.6 million will be used in part to provide all of the consideration for the acquisition of MarketMakers
-- MarketMakers had revenues of GBP11.4m and adjusted EBITDA of
GBP1.7m for year ended 31 December 2016
-- On MarketMakers:
o ranked as the No.1 telemarketing agency in the UK by B2B
Marketing and has achieved growth in revenues of 27% over the last
three years
o will bring sophisticated B2B telemarketing, data analytics,
database enrichment and automated lead generation to the Centaur
portfolio
o capabilities are entirely complementary to the Centaur's
existing marketing capabilities
-- The Board believes the Transactions will allow the Group to
become fully focused on accelerating the execution of its B2B
strategy whilst reducing its reliance on print and advertising
Andria Vidler, Chief Executive, commented:
"These transactions are a major step forward in the continuing
transformation of Centaur into a B2B focussed business, providing
our increasingly professional customer base with a range of higher
value-added products and services.
"It is the right time for our Home Interest business to fulfil
its potential under new ownership and we wish the management team
every success.
"MarketMakers is the premier business of its kind, led by a
talented team, with a blue-chip international customer base. We
believe that the business is a natural fit: an entrepreneurial,
ambitious company which puts the needs of customers front and
centre. It brings a rich array of products and technology to
Centaur which we will be offering to our customers, while at the
same time exposing MarketMakers' extensive customer base to
Centaur's products and services.
"The process of taking Centaur up the B2B value chain continues,
and these transactions are a very significant step forward in our
ambitions."
Conference call
There will be a conference call hosted by management for
analysts and investors at 0830hrs this morning. If you would like
to participate, please contact Tulchan Communications at
centaurmedia@tulchangroup.com
Enquiries
Centaur Media Plc Andria Vidler, Chief Executive 0207 940
4000
Swag Mukerji, Chief Financial Officer
Tulchan Communications James Macey White 0207 353 4200
Will Smith
Centaur strategy
Over the last three years, Centaur has successfully evolved from
its controlled circulation advertising reliant legacy to a
focussed, digitally aligned Group. It now offers a range of
products and services that enable professionals to optimise their
business performance including market insight, data, consultancy
and events.
This transformation is being driven by leveraging content skills
and expert sector knowledge from Centaur's publishing heritage and
combining these with data and digital development expertise. At the
same time, the Group is creating "must-attend" events and valued
digital business intelligence subscription products. Centaur's
brands are being repurposed, making them relevant to both current
and future customers.
During its ongoing transformation, Centaur has either acquired
or developed additional capabilities that are non-advertising
reliant that include training, market reports, marketing
procurement audits, bespoke consultancy, research and e-learning.
All these additional capabilities are being applied to an
increasingly professional customer base. The Acquisition is a
further step in this strategy to provide the Group's clients with a
widening range of value added services. In the future, further
skills may be added to the Group's capabilities. These may include
data analytics, research services, ecommerce skills, procurement
analytics and services, amongst others.
The Disposal
On 29 March 2017, the Board announced that it had commenced a
process to explore the sale of the business to consumer ("B2C")
division, the Home Interest Business. Centaur is now pleased to
announce the conditional disposal of the business to Future
PLC.
Under the terms of the Disposal agreement, Future Publishing
Limited, a wholly owned subsidiary of Future PLC, will acquire the
entire issued share capitals of Ascent Publishing and Centaur
Consumer Exhibitions (the Home Interest Business) for an enterprise
value of GBP32m less GBP1.76m (representing the net amount of
cash-backed deferred income and associated costs and other
identified debt like items), resulting in a net cash consideration
of GBP30.24 million, subject to customary post-Completion
adjustments.
For the year ended 31 December 2016, the Home Interest Business
made a material contribution to the Group's revenues and profits.
Revenues attributable to the Home Interest Business were GBP12.9
million out of the total revenues for the Group of GBP72.5 million.
During the same period, EBITDA attributable to the Home Interest
Business was GBP3.3 million out of adjusted EBITDA for the Group of
GBP12.4 million and the Home Interest Business had profit before
tax of GBP1.3m. As at 31 December 2016, the gross assets
attributable to the Home Interest Business were GBP4.3m out of the
total gross assets for the Group of GBP113 million. Completion of
the Disposal only (without the Acquisition) will materially reduce
the Group's earnings but in turn, would significantly strengthen
the cash position of the Group.
The Home Interest Business consists of three key brands:
Homebuilding & Renovating; Period Living and Real Homes,
providing seven market leading exhibitions in addition to print and
digital assets. In 2016, the exhibitions attracted approximately
94,000 visitors and 1,734 exhibitors providing the Home Interest
Business with multiple opportunities throughout the year to
successfully engage with its audience.
The Home Interest Business is the only part of Centaur that has
a B2C proposition. As such, it is considered non-core. The disposal
of the Home Interest Business will allow Centaur to further focus
itself as a B2B business intelligence and events media group
offering a growing number of higher value-added products and
services to its increasingly professional customer base.
Over the last three years considerable resource has been
invested into the Home Interest Business to improve its performance
with the intention of growing it to a scale that will maximise
shareholder value on disposal. The Board believes that this
standalone business is now of sufficient scale and performance for
its divestment to increase shareholder value by generating
significant proceeds for appropriate reinvestment, as the Group
continues the process of realigning its business to better serve
its customers.
The Home Interest Business has been run on a stand-alone basis
by a highly experienced team. They will be leaving Centaur with the
business they are managing on completion of its sale and the
Centaur management wish them very well. There will be no departures
from the Group by key individuals as a result of the Disposal.
The leadership team of the Home Interest Business comprises
Steve Newbold, Divisional Managing Director (who will remain part
of the Centaur Group), Nick Noble, Deputy Managing Director,
Michael Holmes, Director of Content & New Product Development
and Jason Orme Editorial Director.
The net proceeds from the Disposal will be used in part to
provide all of the consideration for the Acquisition. The balance
of the proceeds from the Disposal will be used to strengthen the
Group's balance sheet and may be used to explore other acquisitions
which support its strategy. The Group will also consider the
buyback of Shares at such times and on such basis as may be
appropriate.
The Acquisition
Under the terms of the acquisition agreement, Centaur will
acquire the entire issued share capital of MarketMakers for an
initial fixed cash consideration of GBP13.4 million plus the
surplus cash and working capital in MarketMakers (valued at GBP3.1
million, of which GBP2.8 million is represented by surplus cash
held within MarketMakers) and a deferred earnout amount based on
EBITDA performance to the period ending 31 December 2017. The
Sellers of MarketMakfers are Paul Thomas, Henry Braithwaite, Kirsty
Dawe and Tom James.
The maximum cash consideration payable when aggregated with the
EBITDA earnout is: (i) GBP17.0 million - conditional on
MarketMakers achieving EBITDA growth of 47% for FY17 of GBP2.5m;
plus (ii) the additional amount representing certain tax
adjustments and surplus cash and working capital in MarketMakers as
at 31 December 2016 valued at GBP3.1 million, of which GBP2.8
million is represented by surplus cash held within MarketMakers.
Therefore, assuming earnings targets are met, the maximum
consideration payable for the Acquisition will be GBP20.1
million.
For the year ended 31 December 2016, revenues of MarketMakers
were GBP11.4 million, and during the same period adjusted EBITDA
was GBP1.7 million and profit before tax was GBP1.4 million.
Unadjusted EBITDA, which includes charges for share options, was
GBP1.5 million. As at 31 December 2016, MarketMakers' gross assets
were GBP6.5 million.
MarketMakers has a proven track record of growth and innovation,
offering B2B clients customer insight through data analytics,
database management and lead generation; customer engagement and
lead generation through digital communication; and sales
performance tracking and customer acquisition through customer
sales and retention.
MarketMakers is the premier business in its industry, offering
its blue chip, international B2B customer base a highly focussed
suite of marketing support services.
Founded in 2004 and based in Portsmouth, MarketMakers employs
approximately 300 people and is ranked the No.1 telemarketing
agency in the UK by B2B Marketing. MarketMakers has a proven track
record of consistent growth with a strong balance sheet and has
achieved 13% revenue CAGR over the last 3 years.
MarketMakers' capabilities are entirely complementary to
Centaur's existing marketing services capabilities. The Acquisition
has the potential to accelerate the growth of Centaur's digital
subscription products with the introduction of automated marketing
services combined with an integrated data analytics environment.
The Acquisition also has the potential to cross-sell MarketMakers'
services to Centaur's customer base together with the introduction
of new customers to Centaur.
The management of MarketMakers will remain with the business and
is expected to play a role in introducing its company's
capabilities across Centaur's customer base. In the medium term the
Acquisition may also offer potential cost synergies through
MarketMakers' out-of-London location.
The management team of MarketMakers currently includes Henry
Braithwaite and Kirsty Dawe (Managing Directors), Alan Yonge
(Finance Director) and Tom James (Sales Director). Following the
Acquisition, it is proposed that Henry Braithwaite, Tom James and
Kirsty Dawe will remain with MarketMakers. Henry Braithwaite will
continue to manage day-to-day operations of MarketMakers, supported
by Kristy Dawe and Tom James. As part of the transaction, Henry
will remain with MarketMakers for a minimum of twelve months and
will report into - and be accountable to - the Executive Committee
of Centaur Media.
Current trading and prospects
On 9 May 2017, Centaur published a trading statement for the 13
weeks ended 31 March 2017. "The Group traded in line with
management expectations in the first three months of the new
financial year. As expected, headwinds seen across the print and
digital advertising markets during 2016 have continued. Cash flow
continued to improve and the Group further reduced its net debt."
There has been no significant change to the current trading and
prospects of the Group
Following the Disposal and the Acquisition, the Group intends to
continue to pursue its stated strategy to deliver improved
performance by concentrating on B2B assets. The Directors of
Centaur believe that the combined effect of the Disposal and
Acquisition (assuming both complete) will be to initially reduce
the Group's earnings whilst generating sufficient cash to
strengthen its balance sheet and help enable the Group to continue
to pursue its B2B strategy.
The Group is expected to receive net cash proceeds of
approximately GBP28.6 million (after deductions, fees and other
transaction costs) from the Disposal. Completion of the Disposal
only (without the Acquisition) will materially reduce the Group's
earnings but will significantly strengthen the cash position of the
Group with which to pursue further opportunities to grow the
business.
This announcement contains inside information which is disclosed
in accordance with the Market Abuse Regulation which came into
effect on 3 July 2016.
This Announcement includes statements, estimates, opinions and
projections with respect to anticipated future performance of the
Company ("forward-looking statements") which reflect various
assumptions concerning anticipated results taken from the Company's
current business plan or from public sources which may or may not
prove to be correct. These forward looking statements can be
identified by the use of forward looking terminology, including the
terms "anticipates", "target", "believes", "estimates", "expects",
"intends", "may", "plans", "projects", "should" or "will", or, in
each case, their negative or other variations or comparable
terminology or by discussions of strategy, plans, objectives,
goals, future events or intentions. Such forward-looking statements
reflect current expectations based on the current business plan and
various other assumptions and involve significant risks and
uncertainties and should not be read as guarantees of future
performance or results and will not necessarily be accurate
indications of whether or not such results will be achieved. As a
result, prospective investors should not rely on such
forward-looking statements due to the inherent uncertainty therein.
No representation or warranty is given as to the completeness or
accuracy of the forward-looking statements contained in this
announcement. Forward-looking statements speak only as of the date
of such statements and, except as required by the FCA, the London
Stock Exchange or applicable law, the Company undertakes no
obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise. No statement in this Announcement is intended to be a
profit forecast and no statement in this Announcement should be
interpreted to mean that earnings per share of the Company for the
current or future financial years would necessarily match or exceed
the historical published earnings per share of the Company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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