MonsterMob Group PLC - Acquisition
RNS Number:2820C
MonsterMob Group PLC
25 August 2004
MONSTERMOB GROUP PLC
('Monstermob' or 'the Group')
MONSTERMOB ACQUIRES 9 SQUARED INC.
Monstermob, the provider of entertainment content for mobile phones, announces
an agreement for the acquisition of 100% of the share capital of 9 Squared Inc.
('9 Squared') for an upfront cash consideration paid today of $2,949,563
(£1,617,085) plus a maximum deferred consideration, to be paid on completion on
1 March 2005, by the issuance of a maximum of 22,017,856 Monstermob shares. This
represents a maximum of 90 per cent of the current issued share capital,
equating to £15,336,756 at the closing mid-market price of 70 pence on 24 August
2004.
The deferred consideration payable to the shareholders of 9 Squared is dependant
upon a formula applied to the revenues of 9 Squared during the fourth quarter of
2004 and earnings before federal income tax ('PBT') for the full year of 2004.
Monstermob will control all voting rights in 9 Squared pending payment of the
deferred consideration and representatives of Monstermob will join the board of
9 Squared immediately.
The deferred consideration will be calculated by applying the formula 0.764 x (7
x (Q4 2004 revenues) + 4 x (2004 PBT)), and will be satisfied through the issue
of Monstermob shares on 1 March 2005, subject to the following cap and collar on
Monstermob's share price. Monstermob and 9 Squared have agreed that the
consideration to be paid in Monstermob shares will be priced at the average
mid-market price during December 2004, this price being not less than 117p and
not more than 185p.
In the five months ended 30 May 2004, 9 Squared made an unaudited profit before
federal income taxes of $395,043 (£216,699) with revenues of $1,400,118
(£768,030). In the month of July, 9 Squared generated unaudited profit before
federal income taxes of $168,334 (£92,339) on revenues of $480,373 (£263,506).
As at 31 May 2004, 9 Squared had negative net assets (excluding intangibles) of
-$4,605 (-£2,523).
Based in Denver, USA, 9 Squared is a provider of mobile entertainment products
and services under the RingTone JukeBoxTM, mTat2TM and Great American Country(R)
brand names to various leading US and international mobile network operators
utilising the Code Division Multiple Access ('CDMA') technology platform.
Currently, US network operators Alltel, US Cellular, Western Wireless, MetroPCS
and Cricket (between them, c.a 15.5m end users) feature these applications on
their portal sites. CDMA is a cellular technology originally developed by
Qualcomm that competes with GSM cellular technology worldwide. CDMA mobile
network operators currently service c.a. 50% of all US subscribers -
approximately 85 million users.
9 Squared possesses proven technological competencies and has direct access for
content delivery to over 20 mobile network operators in the United States on
CDMA, TDMA and GSM networks, in addition to the above US network operators which
feature 9 Squared branded products directly. In addition, through its exposure
on mobile network operators' portal sites, 9 Squared has established a
recognised brand name and operates its own direct to consumer website,
www.ringtonejukebox.com, which continues to experience significant growth.
9 Squared is in the process of rolling out a subscription based ringtone
application on China Mobile, which is the largest mobile network operator in the
world with over 160 million subscribers. In other parts of Asia, 9 Squared is in
the process of providing its RingTone JukeBoxTM and mTat2TM applications to a
number of international carriers.
The company has just launched in Thailand and expects to launch in several other
Asian markets over the coming 3 months. 9 Squared is currently providing its
mTat2TM and RingTone JukeBoxTM applications in a number of Latin American
countries including Puerto Rico, Venezuela, Dominican Republic, Panama, Peru and
expects to be live in 16 Latin American markets by the end of 2004. In Europe, 9
Squared is supplying Zapp, a Romanian carrier with its RingTone JukeBoxTM
application and will provide solutions to other carriers in Europe once Qualcomm
begins providing CDMA coverage.
Monstermob believes the acquisition of 9 Squared will enable the Group to build
a platform from which to establish itself as one of the leading mobile
entertainment companies worldwide. Monstermob has structured the enlarged Group
behind two global operating divisions - Consumer Services and Network Services -
which will respectively provide mobile entertainment applications directly to
consumers and through mobile network operators on both CDMA and GSM networks
throughout our operating territories in Europe, North and South America and
Asia. The Directors believe that the enlarged Group will possess unparalleled
depth and experience of employing both direct to consumer and carrier-led
business models in the markets which it currently operates in. Monstermob
believes it will benefit from a superior risk profile to most of its competitors
due to the significant barriers to entry to replicating the reach and depth of
our services, and complementarity of the enlarged Group.
Due to the nature of the deferred consideration, it is currently not known
whether the shareholders of 9 Squared will hold more than 30% of the enlarged
share capital of the Group following such payment in Monstermob shares. This may
require a waiver by the Panel on Takeovers and Mergers so as to release the
vendors from the requirement to make a mandatory cash offer for the entire
issued share capital of Monstermob under Rule 9 of the City Code on Takeovers
and Mergers. This would, should the situation arise, require the approval of
Monstermob's shareholders at an extraordinary general meeting.
9 Squared was founded in 2001 by CEO James Eberhard. James Eberhard and Brian
Casazza, COO, will spearhead Monstermob's relationships with mobile network
operators globally. James and Brian today join Monstermob's board of directors
respectively as Managing Director, Network Services and Operations Director,
Network Services with service agreements in line with other executive directors
of the Group. Monstermob will begin full integration of 9 Squared immediately.
Agnitio Capital Limited ('Agnitio') was the exclusive M&A advisor to Monstermob
on this transaction. Agnitio is authorised and regulated by the FSA.
Martin Higginson, CEO, Monstermob said:
'The acquisition of 9 Squared will enable Monstermob to create a leading global
direct to consumer and carrier based mobile entertainment company that will
excel in providing the broadest and deepest range of content to any network -
CDMA or GSM - worldwide. The transaction will position the business for
substantial growth throughout 2005 and 2006. With significant barriers to entry
to replicate, this is a further step in establishing Monstermob as the number
one mobile content provider globally.
Monstermob will leverage 9 Squared's mobile network relationships and
connectivity to increase the breadth and depth of its direct to consumer
activities in the US and worldwide. In parallel, 9 Squared will take advantage
of Monstermob's relationships in the UK and Europe. Unlike many of our
competitors we are focusing equally on both business models in order to
diversify and de-risk our proposition.'
-ENDS -
For further information, please contact:
Martin Higginson, CEO Tel: 07778 491 850
Monstermob Group plc
Charles Reynolds / Robin Tozer Tel: 0207 861 3232
Bell Pottinger Corporate & Financial
About 9 Squared
*9 Squared is a leader in developing and aggregating
entertainment-related content for mobile phones. Equipped with an extensive
catalogue of premium content and vast distribution channels, 9 Squared
offers compelling solutions for companies that are interested in translating
their brands and properties to mobile phones. 9 Squared's mobile
entertainment platform, MobilePlexTM, offers turnkey solutions that bridge
media and entertainment companies to the mobile entertainment industry.
*9 Squared's proprietary technology and branded applications allow for
delivery to more than 870 million handsets on CDMA, TDMA, and GSM networks
utilizing protocols such as J2ME, SMS, MMS, WAP, and BREW. MobilePlexTM
solutions generate viable revenue streams for 9 Squared's partners who
include mobile network operators, media companies, record labels, music
publishers and entertainment management companies. 9 Squared acts as a
liaison to the mobile entertainment marketplace and offers the ability to
reach millions of mobile subscribers world wide.
*9 Squared provides applications to mobile network operators utilising
the Qualcomm-based download platform BREW, designed for CDMA networks, that
allows end users to demo applications before they purchase them through 'one
touch' billing. BREW allows for secure over the air distribution of
applications to subscribers' handsets and coordinates billing and payment
for operators and third party developers. 9 Squared has been selected as a
'select' developer of BREW applications due to its technical expertise and
certification from Qualcomm.
About Monstermob
*Monstermob Group plc is a UK mobile phone entertainment content provider
whose shares were admitted to trading on the Alternative Investment Market
(AIM) of the London Stock Exchange on 24 November 2004.
*Monstermob reported turnover of £13.9 million and profits before tax of
£1.5 million in its preliminary results to the year ended 31 December 2003.
*Monstermob markets differentiated and easily accessed mobile phone
entertainment and personalisation services. These include ringtones, java
games, colour wallpapers and videos as well as community chat and
competition products. The Company focuses on products that appeal to the
most prolific adopters of mobile content - the 14-30 age group.
*Monstermob has more than 320,000 subscription customers as well as a
database of over six million mobile telephone numbers of customers.
*Monstermob is the exclusive provider of non-network mobile content to
Dixons Group which markets Monstermob's products through its network of
stores. Other partners include Dialaphone and certain mass-circulation
magazines and web partners.
This information is provided by RNS
The company news service from the London Stock Exchange
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