Acquires 24i to accelerate online video strategy
15 July 2019
AMINO TECHNOLOGIES PLC
("Amino", the "Company" or the "Group")
Amino acquires 24i to accelerate online video strategy
Enables full 'end to end' solution and increases focus on software and services
Amino Technologies plc (LSE AIM: AMO), the technology provider for modern TV experiences, has acquired 24i Media ("24i", the "Acquisition"), an online video specialist, providing Apps as well as user experience ("UX") solutions and services for a total consideration of €21.4m.
· Acquisition of 24i
o Online video experience specialist, providing apps for TV and streaming devices as well as user experience solutions and services
o Operates in a growth area of the online video market
o Revenue of €7.1m for the year to 31 December 2018 and track record of growth
o Expected to generate c.35% recurring revenues in the year to 31 December 2019, and continue to deliver double digit growth
o Strong and well-incentivised management team
o Acquisition expected to be earnings accretive in first full year of ownership (FY2020)
· Evolution of Amino strategy as planned
o Acceleration towards higher margin software and recurring revenues
o Consistent with Amino's strategy to deliver full 'end to end' solution to customers
o Develops new customer base and complements existing customer base
o Positions Amino in high growth online video experience segments
o Entry into growing UX market gives Amino early sight of upcycling opportunities
· Complementary with Amino's existing capabilities
o TV Everywhere - extends existing AminoTV capabilities for online video
o Android TV - adding UX/UI capabilities to our 'Operator Ready' proposition
o Upcycling - moving into video re-platforming for brownfield opportunities
o Minimal overlap with existing operations
· Total Consideration of €21.4m for 87% of the issued share capital (equates to an equity valuation of €24.7m for 100% of the business and an enterprise valuation of €27.5m)
o Initial consideration of €19.3m (€16m in cash, €3.3m in Amino shares)
o Deferred cash consideration of €2.1m
o Following a reorganisation of 24i, Amino owns 92% of the issued share capital of 24i, with the balance of 8% owned by Founders
Background to and rationale for the Acquisition
24i shares Amino's vision of where the modern TV industry is heading and, like Amino, recognises that the industry is at the beginning of the curve of disruption. This is a fundamental shift from broadcast and hardware to streaming and hosting video platforms in the cloud. Like Amino, 24i has an agile culture of innovation and is focused on capturing this market opportunity.
The Acquisition will enable Amino to deliver full 'end-to-end' and on-demand personalised content solutions to its customer base. It will also build momentum in Amino's software and services revenues, as well as its recurring revenues.
24i extends Amino's customer base, as well as the products and services it offers. There are clear cross selling and upselling opportunities. Amino serves mainly operators whereas 24i serves mainly broadcasters but is also of high appeal to operators.
24i's product suite is highly complementary to Amino's existing offering and results in a broader and deeper product set, talented and deep R&D capabilities and a greater geographical reach.
24i's focus on the user experience will allow Amino earlier engagement in the sales cycle with customers, and continued engagement during selection of the extended ecosystem.
Information on 24i
24i is an online video specialist, providing Apps as well as user experience solutions and services, complementary to Amino's existing offering.
Owned by Martijn van Horssen, Hans Disch 24i, 24i Stak (the "Founders") and certain funds managed by Newion Investments and No Such Ventures, 24i was founded in 2009 and is a privately held company. Headquartered in Amsterdam with 140 employees it has an established international presence with offices in Amsterdam, Brno (Czech Republic), São Paulo, New York, Los Angeles and Madrid.
24i has an award-winning technology framework and portfolio of products and services that power the digital experiences of leading entertainment brands around the world, including NPO, iflix, KPN, PureFlix, RTE, NLZIET, Fox Sports, Globo and Sinclair Broadcasting Services.
In 2018, the revenue split by geography was Europe (59%), North America (35%) and ROW (7%). 24i's core software product is the Smart Integrated Framework, a solution architecture. This is modular and enables agile development supporting both highly customised solutions for Tier 1 customers through to standardised SaaS products for clients wanting fast time to market and cost-effective products.
24i's key senior management will all be retained and incentivised by Amino with part ownership of the 24i business.
Key financial information on 24i
24i has consistently demonstrated significant revenue growth. 24i had revenues of €7.1m in the fiscal year ended 31 December 2018 (2017: €4.6m), EBITDA of €0.5m (2017: €0.5m) and a loss before tax of €(0.1)m (2017: profit before tax of €0.2m) based on unaudited financial information prepared using Dutch GAAP. In the four month period to 30 April 2019, 24i had revenues of €2.9m and EBITDA of €(0.1)m, based on unaudited management accounts using Dutch GAAP.
Double-digit revenue growth is expected to continue at current gross margin levels. Recurring revenue of 35% is expected in 2019.
As at 31 April 2019, 24i had net debt of €2.5m and net assets of €3.6m. All revenues are earned from software and related services.
Terms of the Acquisition
Amino has acquired 87% of the issued share capital of 24i at an equity valuation of 100% of the business of €24.7m. This equates to a Total Consideration of €21.4m (see below for a break-down). The enterprise value is €27.5m.
Following a concurrent reorganisation, Amino owns 92% of the issued share capital of 24i, with the balance of 8% owned by the Founders. This reorganisation comprised a €5m recapitalisation of 24i for working capital purposes, and the transfer of 100% of the share capital of Amino Communications Oy to an enlarged 24i (the "24i Group").
The initial consideration of €19.3m comprised:
· €16m in cash, funded using Amino's existing cash and debt resources; and
· €3.3m in Amino shares, comprising 3.2m 1p Ordinary Shares in the Company (paid to the Founders and subject to a two-year lock-up restriction), valued using the 60-day volume weighted average price to 30 June 2019 (the "Consideration Shares").
The deferred consideration of €2.1m comprises:
· €1.05 million in cash payable on the first anniversary of the transaction subject to the Founders remaining managing the 24i Group; and
· €1.05 million in cash payable on the second anniversary of the transaction subject to the Founders remaining managing the 24i Group.
The Founders have been granted a put option to sell the remaining 8% of the 24i Group not owned by the Company to the Company on the second anniversary of the Transaction in return for 1p Ordinary Shares in the Company or for cash at the Company's discretion. If this option is exercised, the price paid per 24i share by the Company will be equal to the price paid per 24i share of the Total Consideration.
The Acquisition is expected to be earnings accretive in the first full year of ownership (FY2020).
Donald McGarva, Amino Chief Executive Officer, said:
"The fast-growing 24i is a great strategic acquisition for us, moving us closer to a decisive market leadership position. Not only does 24i's leadership in UI/UX and TV/Online video Apps complement our product line-up, but 24i also shares our vision of where the industry is headed, and the agility and culture of innovation required to get it there profitably."
Karen Bach, non-Executive Chairman, said:
"We are delighted to welcome 24i to Amino, as part of our planned acceleration in strategy in driving the company in the growing online video sector. 24i is highly complementary to Amino's three long-term growth drivers - IP / Cloud TV Everywhere, Operator Ready Android TV and Upcycling legacy devices to next generation TV experiences."
For further information please contact:
Amino Technologies PLC
+44 (0)1954 234100
Donald McGarva, Chief Executive Officer
Mark Carlisle, Chief Financial Officer
finnCap Ltd (NOMAD and Broker)
+44 (0)20 7220 0500
Matt Goode / Carl Holmes / Simon Hicks (Corporate Finance)
Tim Redfern / Richard Chambers (Equity Capital Markets)
FTI Consulting (Financial communications)
+44 (0)20 3727 1000
Jamie Ricketts / Alex Le May / Chris Birt
About Amino Technologies plc
Amino is a global leader in media and entertainment technology solutions and an IPTV pioneer, working with over 250 operators in 100-plus countries. Drawing on more than 20 years' experience delivering IP/cloud innovation, Amino enables operators to meet the challenges they face as broadcast TV and online video moves to an all-IP future with managed over-the-top (OTT) offerings. We are expert in software, hardware and cloud implementation - able to deploy our own leading-edge technologies and integrate these with third-party and 'upcycled' legacy systems. At the forefront of the evolution of TV Everywhere, Amino helps operators to provide the features and functionality modern consumers are looking for in a multiscreen, multi-device entertainment world.
Having deployed over 10 million customer premise devices and the software necessary to link the back end to the user interface, we understand the issues operators face. We partner with operators to deliver end-to-end, operator-ready solutions that enable next-generation customer experiences. We 'upcycle' existing infrastructure to support more advanced services and integrate seamlessly with new technologies to form a unified ecosystem. The result is a fresh consumer offering based on a consistent user experience across all screens, building brand reputation, stemming churn, growing subscribers and increasing average revenue per user (ARPU).
Amino Communications is a wholly-owned subsidiary of Amino Technologies PLC and listed on the London Stock Exchange Alternative Investment Market (AIM: symbol AMO), with headquarters in Cambridge, United Kingdom, and global offices in California, Finland, Hong Kong and Portugal. For more details, visit www.Aminocom.com
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