Mobile marketing and payments m-commerce company Mobile Embrace has announced that it has significantly strengthened its international footprint and its performance marketing offering with the acquisition of a leading United Kingdom online performance marketing provider, Marketing Punch.
Founded in 2004, Marketing Punch is a profitable business that has operations in the United Kingdom, France and Australia and is an industry pioneer in providing qualified online performance marketing support to a large range of clients.
Marketing Punch’s recurring revenue base and client retention rates are particularly strong with more than 60 per cent of clients placing an order with the business every month for the past six years. The business has a proprietary opted-in database of over five million consumers and delivers over 100,000 qualified leads to clients each month. Marketing Punch is acquiring database members at a rate of 220,000 new consumers per month.
Marketing Punch’s team, led by the company’s founder and managing director, Charles Haynes, will continue with the business while Haynes has agreed to enter into an employment contract with MBE.
The acquisition of Marketing Punch is in line with the company’s strategy to acquire quality growth businesses that will accelerate the company’s market expansion and performance marketing capabilities.
Marketing Punch gives MBE the necessary scale and international reach to deliver a more integrated offering to clients and partners both domestically and internationally. With consumers increasingly transacting across multiple online and mobile platforms and devices, MBE will be able to provide a much broader suite of performance marketing and consumer analytics products.
Favourable Acquisition Terms and Strong Financial Performance
MBE has acquired Marketing Punch on favourable terms with an upfront cash consideration of £2.14 million (AUD$4.64 million) as well as the issue of 4 million MBE shares at 26 cents escrowed for a period of 12 months. In addition to the upfront consideration, and subject to achieving 100% of financial targets over the next three years, there will be an additional cash consideration of £1.5 million for each year of successful achievement (£4.5 million (AUD$9.77 million).
Marketing Punch is forecast for the UK FY2016 to generate annual EBITDA of £1.2 million (AUD$2.6 million) from revenue of £3.7 million (AUD$8.03 million) which means the acquisition of the business will be immediately earnings per share accretive to MBE.
Funding and New Debt Facility Secured
To partly fund the acquisition of Marketing Punch and fast-track the organic growth of the company’s other international operations, MBE is pleased to confirm that it has secured a £4 million (AUD$8.68 million) debt facility with the Commonwealth Bank of Australia on favourable terms. £2 million (AUD$4.34 million) will be immediately drawn down under the facility to fund the acquisition of Marketing Punch and further funds will be used to fund m-payments international growth.
MBE is particularly encouraged from the support it has received from the Commonwealth Bank and the confidence the bank has displayed in the company’s business model and growth prospects. To secure this facility with such a credible financial institution reflects the maturing of the company and is a strong endorsement of MBE’s clearly defined strategy and future prospects.
Management Commentary
Commenting on the acquisition, Mobile Embrace’s chief executive officer, Chris Thorpe, said: “This is a very strategically important acquisition for the company as it gives our performance marketing operations considerable scale and significantly expands our international operations. The growth opportunities that result from this transaction are highly compelling, and it is an important step in establishing MBE as an emerging global leader in digital performance marketing.
“Like previous businesses MBE has acquired, we have undertaken a thorough due diligence to ensure that Marketing Punch is immediately scalable, is culturally aligned with our existing operations, and can be easily integrated into MBE. This process enables us to manage any acquisition and integration risks. We have a successful track record of acquiring, integrating and growing businesses under the MBE umbrella, and we expect Marketing Punch will be no different.
“By being part of a more multi-faceted performance marketing offering, there are immediate organic revenue growth opportunities that will be realised by leveraging Marketing Punch’s product offering across the MBE group. We have every confidence in this business and its growth potential as part of MBE.”
Thorpe added: “Securing the new debt facility with the Commonwealth Bank of Australia (CBA) is an important milestone for MBE. CBA has taken considerable time to understand our operations and growth strategy, and they have shown the confidence in our business to provide us with the necessary debt funding to help drive our growth. It is a strong endorsement for MBE and marks a maturing of our business.
“FY2016 has started well for MBE and we are on-track to deliver record first quarter performance. Our operating businesses are performing well and our stringent focus on ROE is delivering to the bottom line. We look forward to updating shareholders on first quarter performance in the coming weeks.”
Charles Haynes, CEO at Marketing Punch, added: “Joining Mobile Embrace is a very exciting opportunity for myself and the whole team at Marketing Punch. We are delighted to be working with MBE and its businesses as we look to substantially strengthen our position in the market over the next few months. The move will not only allow us to explore new markets but through significant synergies, due to Mobile Embrace’s recent acquisitions, we expect further rapid growth.”
