- Premium to Perk Shareholders: Upon completion of the Acquisition and exercise of Perk's employee options, each Perk Share will be exchanged for 4.5116 RhythmOne shares. Using a CAD/GBP exchange rate of 1.6868 on 2 December 2016, the value of the consideration to be received by Perk shareholders based on RhythmOne's 30-day VWAP of £0.381 per share will be approximately C$2.90 per Perk Share, representing a premium of 11.5% to Perk's closing price of C$2.60 on 2 December 2016, and a premium of 43.6% to Perk's 30-day VWAP of C$2.02.
- Greater Scale: Perk will benefit from additional scale through RhythmOne's established programmatic platform, RhythmMax. The Transaction will give Perk access to over 600 brands, 441 million global unique users and relationships with over 900 professional publishers.
- Improved Competitive Positioning: The Transaction improves the competitiveness of both companies on the supply and demand side. Perk's highly engaged and verifiable audience will attract new and repeat demand partners to RhythmOne's platform, driving higher fill rates and pricing for both companies.
- Revenue and Cost Synergies: The complementary product offerings of Perk and RhythmOne are expected to enhance the combined company's ability to further penetrate its core target market and enable the delivery of an enhanced digital advertising platform. The Transaction creates a company with a more diversified customer base, higher quality revenue and EBITDA and significant opportunities for revenue and cost synergies.
- Greater Liquidity Profile for Shareholders: Upon completion of the Transaction, Perk Shareholders will benefit from RhythmOne's improved liquidity profile on the London Stock Exchange's Alternative Investment Market.
- Expanded Leadership Team: Ted Hastings, Perk's Chief Executive Officer, together with Perk's senior management team will join RhythmOne upon completion of the Transaction. Perk's long track record of success in building, managing and profitably scaling B2C web properties and apps will directly complement RhythmOne's expertise in building and managing B2B Ad Tech businesses, while also providing scale and infrastructure to help accelerate growth.
Transaction DetailsPursuant to the terms of the Agreement, holders of Perk Shares will be entitled to receive 4.5116 RhythmOne common shares for each Perk Share held. Based on RhythmOne's 30-day VWAP of £0.381 per share as of December 2, 2016, the Transaction is valued at approximately US$42.5 million. This represents a consideration of C$2.90 per Perk Share and a premium of 11.5% to Perk's closing price on December 2, 2016, and a premium of 43.6% to Perk's 30-day VWAP ending on December 2, 2016. Upon completion of the Transaction, Perk will become a wholly-owned subsidiary of RhythmOne. The Agreement provides that Perk may consider and accept unsolicited superior proposals, subject to a termination fee payable to RhythmOne and a right for RhythmOne to match any superior proposals. Perk's Board of Directors and senior management, and AVG Ventures, LP, representing, in aggregate, approximately 39% of outstanding Perk Shares, have entered into customary voting and support agreements, pursuant to which they have agreed to vote their Perk Shares in favor of the Transaction. The Transaction will be conducted by way of plan of arrangement under the Business Corporations Act (Ontario) and will require the approval of no less than 66 2/3% of the votes cast at a special meeting of Perk securityholders that is expected to be held in mid-January 2017. In addition to the approval of Perk securityholders, closing of the Transaction is subject to the satisfaction of certain closing conditions customary for transactions of this nature. RhythmOne shareholders have preauthorized the issuance of the required shares needed to complete the Transaction. Additional details of the Transaction will be provided to Perk securityholders in an information circular to be mailed in mid-December, 2016. Financial and Legal Advisors Beacon Securities Limited is acting as exclusive financial advisor to Perk and has provided an opinion to Perk's Board of Directors to the effect that, as of December 4, 2016 and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be received by Perk shareholders pursuant to the Transaction is fair, from a financial point of view, to such Perk shareholders. Torys LLP is acting as legal counsel for Perk in connection with the Transaction.
Cormark Securities Inc. is acting as financial advisor to RhythmOne and DLA Piper (Canada) LLP is acting as legal counsel to RhythmOne in connection with the Transaction.Conference Call Perk and RhythmOne will be hosting separate conference calls to discuss the Transaction. RhythmOne hosted a webcast at 8.30am GMT; 3:30am EST on December 5, 2016. A replay of the webcast can be found at on RhythmOne's website at https://investor.rhythmone.com/. Perk will be hosting a conference call later this morning at 8:30 am EST on December 5, 2016.
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