Gfinity PLC (AIM:GFIN, FRA:3GF) is to acquire Megit Limited, a private company that owns and operates the website Stock Informer, for an initial consideration of £5mln.
Half of the consideration will be satisfied in shares, with the rest paid in cash. As is common with many acquisitions, there is an “earn-out” period during which the final acquisition price may rise, depending on how the acquired business performs. The maximum aggregate consideration payable over the earn-out period is £1mln.
The e-sports specialist has conditionally raised £3.3mln before expenses through a share issue.
The shares were issued at 4p each.
Chief executive John Clarke and the chief finance and operations officer Jonathan Hall subscribed for 625,000 and 250,000 shares respectively.
Stock Informer's sites have become established as an authority on the availability of hard to secure products, with an emphasis on technology and gaming equipment, driving high margin revenues from e-commerce referral income, Gfinity said.
There's got to be a search engine or something. I used https://t.co/H63bq9dMrI and thats how I managed to get both Xbox and PS5. Theres got to be a U.S version or something?
— Subtle As A Sledge Hammer ???????? (@subtle_hammer) August 22, 2021
In the year to the end of March 2021 Megit reported revenues of £2.3mln at a net margin of more than 90%, with the top line growing sharply against a background of a global computer chip shortage, the release of new games consoles and a continuing shift to online shopping.
Gfinity’s directors believe there are numerous ways in which Stock Informer’s business can be expanded, and “on a conservative basis” reflecting an expected reduction in console related commissions, the site may be expected to add revenue of £1.2mln in the first year post-acquisition, at a net margin of around 75%. This would rise to £1.5m in the second year, again at a net margin of about 75%, Gfinity said.
"Gfinity's strategic focus is based on strengthening and growing 'what we own', in particular the Gfinity Digital Media group. The proposed acquisition of Stock Informer delivers this,” said John Clarke.
“It is a highly profitable e-commerce referral site for gamers and their lifestyles. Stock Informer will be embedded into the GDM division once the transaction completes. It is a transformational acquisition for the company and highlights the ambition of the directors to continue to drive profitable growth within the group,” he added.
Stock informer on the Discord app, notifies you the second one becomes available and the server tells you how to set it up for notifications on ya phone pic.twitter.com/cVnmZpqi1m
— Ro$hi Da Juiceman (@RichRoshi) August 20, 2021