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The App Business has been acquired by St Ives

By Julie Langley 29 Jan 2016

London, 29th January 2016

St Ives plc (“St Ives” or the “Group”), the international marketing services group, announces that it has agreed to acquire 82.16% of The App Business Limited, a mobile-led consultancy specialising in strategy, product development and business transformation. St Ives intends to acquire the remaining 17.84% pursuant to an option arrangement as described below.

Established in 2009, the business employs over 100 staff and is headquartered in London. The company has a strong blue chip client base with particular strength in the consumer goods, automotive, travel, retail and publishing sectors.

The acquisition represents a continuation of St Ives’ strategy to further enhance its wider digital expertise and, following the recent acquisition of Solstice Mobile, provides the Group with additional scale and deeper strategy and development capabilities within the fast growing mobile technology sector.

In the financial year ended 30 April 2014, TAB generated EBITDA of £1.5 million and revenue of £5.1 million, with gross assets of £2.7 million. For the financial year ended 30 April 2015 TAB generated EBITDA of £3.7 million and revenue of £11.3 million (as per unaudited management accounts).

St Ives has agreed to acquire TAB on a cash and debt free basis and has acquired 82.16% of the issued share capital of TAB, for an initial consideration of £22.3 million to be satisfied by approximately £16.7 million in cash and the issue of approximately 2.6 million St Ives shares to the vendors.  The Company intends to acquire the remaining 17.84% of the issued share capital pursuant to a call option, exercisable by St Ives with the consent of the relevant TAB seller, between 11 February 2016 and 18 February 2016. Alternatively, the Company may acquire the remaining shares pursuant to a put option exercisable by the relevant TAB seller between 4 February 2016 and 11 February 2016.  The exercise of the put or call option will be satisfied by approximately £3.7 million in cash and the issue of approximately 0.6 million St Ives shares.

Further deferred consideration of up to £27.8 million may be payable (to be satisfied not less than 75% in cash and up to 25% in shares) dependent on incremental profit performance for the financial years ending 30 April 2016, 2017 and 2018. The cash component of the consideration will be funded through existing cash reserves, the proceeds of a placing (the “Placing”) and the Group’s debt facilities. In this regard, additional bank financing of £10 million has also been secured from the Group’s existing debt providers, with pro forma leverage expected to be approximately 1.5 times EBITDA at 29 January 2016.

The Acquisition (including the impact of the Placing) is expected to be earnings enhancing, on an underlying basis, in the current financial year.

TAB will operate as a subsidiary of St Ives and will continue to be managed from its current location by its existing management team, which includes Daniel Joseph and Rob Evans, the principal vendors.

Matt Armitage, Chief Executive of St Ives, comments:

“This acquisition further strengthens St Ives’ digital credentials, and, coupled with the recent acquisition of US based Solstice Mobile in 2015, significantly increases the Group’s mobile strategy and product development engineering capabilities.”

Daniel Joseph and Rob Evans, co-founders of TAB comment:

“St Ives track record of accelerating the growth of autonomous businesses will enable TAB and its team to achieve its goals faster and serve our clients’ emerging needs even better. We couldn’t be more excited about the journey ahead.”

Feedback from The Client:

“In selecting our advisor, our focus was chemistry and cultural fit with the team, a deep understanding of the value of our proposition in the market, and the ability to identify and negotiate with a very broad range of global buyers, from tech consultancy to PE to marcoms. Results excelled and delivered across all of these points and stood out particularly strongly on cultural fit: they rapidly formed a collaborative team with us at TAB, worked with genuine agility and speed, and focused on quality – pushing TAB and themselves to get the very best result at all times. This strong partnership and trust between the teams was fundamental to delivering a great result that was right for the company, its staff and its shareholders; and to ensuring that the process, itself, augmented “business as usual” at The App Business, rather than disrupted it.”


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