- 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 - ViggleRobert 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.
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 PerkAs 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.