Diversified media group Swift Networks acquires a leading digital-out-of-home media company, Medical Media at a purchase consideration of $4.5 million upfront.
In a release dated 21 December 2018, Swift Networks Group Limited (ASX: SW1) announced that it has agreed to purchase all the shares in Medical Media at an upfront payment of $4.5 million in shares and an additional $20.5 million payable on revenue driven targets.
Swift’s shares have been valued at 20% premium to $0.3010 per share for the issue to Medical Media shareholders. To fund support the acquisition cost, the company intends to replace its current facility with a new $6 million banking facility by a tier-one lender.
Chief Executive Officer of Swift Network, Xavier Kris said that this accretive transaction with Medical Media would allow Swift Network to ramp up the plan for broadening its market footprints through acquiring a new audience, undertaking mergers and acquisitions and delivering material revenues.
Medical Media is into digital media business. The company specializes in medical practice market which outlines a fast growing vertical in the industry. Further, the content and advertisements delivered by Medical Media have a reach of 5 million viewers every month. This acquisition will see Medical Media bringing in an extensive network of more than 2800 advertisers with expansion in hyper-local and regional advertising.
On the financial front, the integration of Swift Networks and Medical Media is estimated to unveil the cost synergies of approximately $3 million per annum. For the Fiscal Year 2018, Medical media delivered advertising revenue of $7.4 million, up from FY17’s revenue of $5.2 million.
The transaction outlines the Swift’s strategy to merge or acquire with closed-loop networks in high growing verticals. Moreover, with this acquisition, Swift Networks would be well positioned to capitalize on the escalating out-of-home advertising market.
As per the company’s report, Medical Media hold approximately a 25% market share in medical practices, providing low-cost advertising solution for an extended duration. On an average Medical Media captures patients’ attention for 35 minutes in the presence of a screen which in turn provides an efficient solution for advertisers to reach its target audience in the low distracted environment.
This acquisition transaction is expected to be completed by 15 February 2018, subject to shareholders’ approval in the General Meeting and other pre-requisite conditions.
On the news of Medical Media’s acquisition, Swift Networks experienced the positive market sentiments on ASX. Its stock price surged -3.704% to last trade at $0.260 as at 24 December 2018. However, the stock has fallen by 43.16% in the past 12 months.
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