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RNS Number : 3415K
The Mission Marketing Group PLC
10 April 2018
The Mission Marketing Group plc
Acquisition of Krow Communications Limited to significantly
expand the Group's London presence
The Mission Marketing Group plc ("themission", "the Company" or
"the Group", AIM: TMMG), the technology-embraced marketing
communications and advertising group, is pleased to announce that
it has acquired Krow Communications Ltd ('Krow'), an award-winning
creative Agency based in London, for an initial consideration of
GBP2.75 million, to be satisfied in cash (the "Acquisition"). The
Board expects the Acquisition to be earnings enhancing with
immediate effect.
Highlights of the Acquisition
-- The Acquisition delivers a major London presence for themission;
-- Provides significant opportunities for cross-selling the Group's capabilities;
-- Initial consideration will be funded from the Group's existing financial resources; and
-- The Acquisition is expected to be earnings enhancing with immediate effect.
Information on Krow
Listed in Campaign as the UK's 17th largest advertising agency,
Clerkenwell-based Krow was founded in 2005 and today employs 65
staff with a diverse Client list including Fiat, DFS, Ferrero, Sky
Vegas, Wilko, RNLI, Digital Realty and Team GB.
Krow is still managed by the four founders who launched the
business. This stability has helped foster a loyal Client roster,
with many relationships of five years or more. According to
Campaign's Adwatch, Krow's Aardman animated campaign for DFS was
2017's top overall performer, retaining its number one position for
the second year in a row, its Olympics campaign for the same brand
won Retail Week's campaign of the year.
In the financial year ended 31 December 2017, Krow reported
revenues* of GBP7.2 million, underlying pre-tax profits** of GBP1.0
million and as at 31 December 2017 had net assets of GBP0.3
million.
As part of the Acquisition, all Krow founders and employees will
remain employed by Krow.
Rationale for the Acquisition
themission provides a full range of integrated and specialist
marketing communications services to local, national and
international Clients from a network of offices across the UK, Asia
and the US. The acquisition of Krow provides the Group with an
important and high-profile presence in London. Predominantly a
strategic and creative agency, we expect our shared knowledge,
depth of resource and specialist services to strengthen and
complement Krow's offering.
Terms of the Acquisition
Krow has been acquired for an initial consideration of GBP2.75
million for the business ("Initial Consideration"). The Initial
Consideration is to be satisfied by a cash payment funded through
the Group's existing cash resources. The Initial Consideration will
be adjusted based on Krow's 2018 financial performance, with a
further payment to be made in 2019, of which up to GBP0.5 million
will be payable in new ordinary shares. Combined, the Initial
Consideration payments will represent a 3x multiple of Krow's 2018
adjusted EBIT.
Contingent Consideration
Under the terms of the Acquisition Agreement, deferred
consideration is payable, contingent on Krow's financial
performance in 2019 and 2020 ("Contingent Consideration"). The
Contingent Consideration is to be satisfied by the issue of new
ordinary shares (being not less than 5%) with the balance payable
in cash. The cash element is expected to be mostly funded from
future cash-flows generated by the enlarged Group.
To achieve the maximum total consideration (Initial
Consideration plus Contingent Consideration) of GBP14.5 million,
Krow's compound EBIT growth is required to be 25% and it would need
to achieve cumulative EBIT of GBP4.9 million in the three years
ending 31 December 2020.
David Morgan, Executive Chairman of themission, commented: "We
have admired Krow and its approach for quite some time and we are
really looking forward to working with them as part of the
mission(tm) . Krow's team members share our values and their
position in the market, strategic expertise, creativity and strong
senior team will complement our portfolio of Agencies and give us
an important foothold in London."
Barry Cook, one of Krow's founders, commented: "Over the last 11
years, we have built a brilliant, multi-talented and loyal team
that has helped us establish Krow very firmly in the top 20. We
think the time is right for us to build on that position, adding
depth and breadth to our capabilities to meet future client demand.
We are convinced that in themission we have found the perfect
partner to achieve that. We are looking forward to establishing the
Krow brand as a London-based flagship for the Group; it is going to
be a really exciting partnership enabling us to be interconnected
while preserving the integrity of our brand."
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Enquiries:
David Morgan, Executive Chairman
Peter Fitzwilliam, Finance Director
020 7462
The Mission Marketing Group plc 1415
Mark Percy / James Thomas (Corporate
Broking & Advisory)
020 7408
Shore Capital (Nomad and Broker) 4090
* Excludes pass-through costs
** Adjusted for certain costs which would be borne by Krow going
forward
the mission(tm) is a network of entrepreneurial marketing
communications Agencies employing 1,000 people in the UK, Asia and
US. The Group comprises three divisions: Integrated Generalists,
Sector Specialists and Activity Specialists, which work together to
provide Clients with the expertise and resource to make them more
successful in today's dynamic environment.
www.themission.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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