18.5 million Euros cash should do it
Buongiorno Vitaminic, one of the leading companies in the mobile value-added service (VAS) sector, has signed an agreement for the acquisition of a 100% stake in Freever, a leading European company in the Mobile Community sector.
The Mobile Community sector brings mobile telephone users together into groups based on shared interests through services like Chat and Messaging – the resulting content is therefore based on relationships between members of the community. This sector of the mobile-phone based communication and entertainment services market is expected to be worth approximately Euro 1 billion in Europe alone by 2009 .
Formed in France in 1999, Freever has offices in France, the United Kingdom, and Germany, and business cooperation agreements with the major European telephone carriers, giving the company access to more than 100 million customers. Each week Freever offers its members different theme programs, information on events, the chance to participate in various activities (contests, quizzes, etc.), and even the chance to interview famous people like, for example, UK Prime Minister Tony Blair, the singer Beyonce Knowles, and others.
Andrea Casalini, Chief Executive Officer of Buongiorno Vitaminic SpA comments, “Freever is the uncontested leader in the Mobile Community sector in Europe. Due to its excellent management team, specialist knowledge, its dedicated technology platform, management’s constant focus on issues concerning privacy and protection of minors, and the loyalty gained from both the end-users as well as the major European telephone companies, Freever has built a profitable and sustainable business with excellent growth prospects. For Buongiorno, the acquisition of Freever will be another hugely important step in building a strong international leadership position in our market. Plus the business synergies that we plan on achieving, Freever's addition to our Group represents a further growth opportunity going forward.”
Jerôme Traisnel, Chairman, Chief Executive Officer and co-founder of Freever comments, “In turn, Buongiorno Vitaminic’s global reach, its leadership in the mobile value-added services market, and its ongoing relationships with more than 40 carriers throughout the world, represent a unique opportunity for Freever to accelerate its growth. The mobile VAS market continues to offer major opportunities for development and requires increasing size and global scale. We are excited to have the chance to become part of a group that is showing real strength, and setting international standards with a distinctive business model that offers the best opportunity for rapid, sustainable, and durable growth”.
Freever, profitable since 2002, reported Euro 9.6 million in turnover in 2004 and Euro 700,000 in net income. The company reported a net cash position of Euro 2.7 million at end-June and net positive working capital of around Euro 2 million. For the full year 2005, the company forecasts revenues above Euro 12 million and net income of more than Euro 1 million.
The closing of the acquisition of Freever by Buongiorno Vitaminic is subject to certain conditions precedent, among which the approval of the issuance of bonds convertible into Buongiorno Vitaminic shares by the general shareholders’ meeting of Buongiorno Vitaminic, convened on 7, 8 and 9 September (as indicated below), and the obtaining of the financing deriving from the underwriting of a part of the convertible bonds.
The closing of the acquisition will be settled through a cash payment of Euro 18.5 million at the closing date and, possibly, a further variable earn-out price maturing upon the achievement of certain levels of operating result by Freever in 2005. The maximum variable amount is Euro 15.5 million, partially expressed in a number of Buongiorno Vitaminic shares and shall be in part payable in shares or cash at the discretion of the buyer.
Following to the closing of the acquisition, Freever will remain an independent business unit within the Buongiorno Vitaminic Group, it will develop commercial synergies with Buongiorno “geographical” business units, and it will continue to be headed by the current management team, specifically by Jerôme Traisnel in his capacity as Freever’s Managing Director.
The company will provide further details on the operational and income statement impact of the transaction with respect to its targets for 2005 and going forward during the meeting with the Financial Community scheduled for September, as well as – if required - while preparing the information document in compliance with Art. 71 and 91 of the Regulations for Issuers, which would be made available to the public within 15 days after the closing of the acquisition.
Buongiorno Vitaminic plans on financing this and any other possible acquisitions for external expansion through currently available cash (in this regard, we point to the recently concluded third instalment of the capital increase begun last year with Banca IMI, with the underwriting of Euro 8.4 million in new shares by institutional investors), operating cash-flow generated in accordance with the business plan, medium-term bank loans, and the issue of a bond convertible into ordinary shares without option rights according to Art. 2241, 4 paragraph, last period, of the Italian Civil Code.