Swift Networks Group Ltd (ASX:SW1) has agreed to acquire Medical Media, a leading Australian digital-out-of-home media network, for an initial $4.5 million worth of shares.
Medical Media operates more than 2,300 digital screens across Australia which deliver content and advertising to more than 5 million viewers every month.
The acquisition provides Swift group with entry into a new, high-growth industry that is vertical at scale and accelerates the development of its emerging advertising business.
Notably, the integration of the two companies is projected to unlock cost synergies of about $3 million a year.
Swift chief executive officer Xavier Kris told Proactive Investors Medical Media’s business was similar and complementary to the group’s business.
Kris, the company’s upcoming interim executive chairman, said today, “Medical Media is an organisation like Swift that’s focused on providing content and advertising to closed-loop environments.
“It’s perfectly in that sweet spot between traditional broadcasting and traditional out-of-home (media consumption).”
Medial Media’s viewer base can include patients watching screens in a medical centre waiting room, making its approach similar to Swift’s — catch audiences while they are in contained places with few other media consumption options.
Kris highlighted the similarities of the companies’ approach, saying “We provide advertisers access to consumers who are hard to reach from a technology standpoint, from a content standpoint and from an advertising standpoint, because they’re in these captivated — rather than captured — environments.”
Like the waiting rooms of a GP super clinic, Swift’s audiences are in discrete places where they’re ready, willing and able to consume media.
Kris said, “These (are) captivated environments, whether that be an aged care facility, a hotel, an oil rig, a mine site, a medical practice.
“They are environments that have high dwell times, where people are drawn to use the technology or drawn to the screen, and (we) provide them with engaging technology and content, and of course get the advertisers access to those individuals.”
A selection of Medical Media's clients
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Swift’s CEO Kris reported this morning: “I am delighted to welcome Medical Media to the Swift Networks Group.
“This acquisition builds on the strength and continued growth of the underlying Swift business.
“Medical Media is a clear leader in the digital-out-of-home advertising sector which has carved out a strong, defensible market position in medical practices nationally.
The majority of screens are in medical centres
“This accretive transaction accelerates Swift’s strategic plan to broaden our capabilities, acquire new audiences and monetise our expanding footprint to generate revenue through targeted advertising.
“I thank our investors and banking partners for their support of this transaction and look forward to delivering material revenue and cost synergies as we execute our exciting growth plans for the combined, integrated group.”
Investors responded positively with shares up almost 14% to 30 cents in early trade.
Transaction to complete mid-February
The transaction’s completion is expected about 15 February 2019, subject to shareholder approval and other standard conditions precedent.
The $4.5 million share-based payment will be at an issue price of 30.1 cents.
An additional $20.5 million is payable in performance shares subject to achieving advertising revenue targets.
Acquisition brings about board changes
In conjunction with the transaction, Swift has appointed Darren Smorgon as a non-executive director of its board.
Smorgon is managing director of Sandbar Investments, a Sydney-based family office and was a former director and partner of CHAMP Private Equity.
Non-executive chairman Carl Clump will step down from the board after the completion of the acquisition, with Kris to become executive chairman on an interim basis while a replacement is sought.
— with Amanda Ellis