TIDMXLM
RNS Number : 6499F
XLMedia PLC
16 July 2019
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014.
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR RELEASE, DISTRIBUTION, PUBLICATION,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM
CANADA, AUSTRALIA, OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO
SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS
OF SUCH JURISDICTION. PLEASE SEE THE IMPORTANT INFORMATION AT THE
OF THIS ANNOUNCEMENT.
FOR IMMEDIATE RELEASE
16 July 2019
XLMEDIA PLC
Tender Offer for up to 19,675,000 Ordinary Shares
Notice of extraordinary general meeting
TRADING UPDATE
XLMedia PLC ("XLMedia", the "Company" or the "Group") (AIM:
XLM), a leading provider of digital performance marketing, is today
posting a circular to its shareholders containing full details of a
proposed tender offer at 80 pence per Share and a notice of
Extraordinary General Meeting convened for 10.00 a.m. on 16 August
2019.
Unless otherwise stated, terms used in this announcement have
the same meanings as given to them in the Circular.
Summary
-- The Tender Price represents a premium of approximately 10 per
cent. to the mid-market price of a Share at the close of business
on 15 July 2019;
-- The Tender Offer will be restricted to 19,675,000 Shares,
representing approximately 9.51 per cent. of the Shares in issue
(excluding any Shares held in treasury) at the close of business on
15 July 2019;
-- Shareholders (other than Restricted Shareholders) will be
able to tender up to 9.51 per cent. of their holding (rounded down
to the nearest whole number of Shares) under the Basic Entitlement
of the Tender Offer;
-- Each Shareholder (other than Restricted Shareholders) will
also be able to tender Shares in excess of their Basic Entitlement,
but such excess tenders will only be satisfied on a pro rata basis
to the extent that other Shareholders tender less than (or none of)
their Basic Entitlement;
-- Successfully tendered Shares will be held in treasury by the
Company and the number of Shares in issue carrying voting rights
reduced accordingly;
-- The Tender Offer will open at 8.00 a.m. on 17 July 2019 and
will close at 1.00 p.m. on 14 August 2019;
-- The implementation of the Tender Offer is conditional upon
the passing of the Tender Offer Resolution at the General
Meeting;
-- On the date of this announcement, the existing buyback programme shall cease; and
-- While XLMedia has continued to implement its strategy of
focussing on higher margin publishing activities and growing its
finance business during the first half of 2019, the business has
remained stable and overall performance has been in line with the
Board's expectations.
Chris Bell, Non-executive Chairman of XLMedia, commented:
"The Board is of the opinion that the full potential of the
Company is not reflected in the current share price and this Tender
Offer accelerates our current share buyback programme, further
capitalising on our current share price."
This summary should be read in conjunction with the full text of
the Circular.
The Circular is expected to be posted to Shareholders and made
available on the Company's website www.xlmedia.com, later
today.
Trading update
XLMedia provides an update on trading for the six months ended
30 June 2019.
During the first half of 2019, the Group's business has remained
stable and overall performance has been in line with the Board's
expectations.
Pleasingly, the Company has seen a strong performance from its
personal finance publishing assets in North America and Canada,
which continue to gain momentum.
As anticipated, new gambling legislation in Sweden has had an
impact on revenues for many gambling operators; however, the Group
believes this to be a short-term issue with XLMedia's publishing
assets continuing to rank well in the region. Elsewhere, the
Company continues to invest in creating new publishing assets,
including in North America.
The Company has a positive material cash balance and generates
strong cash flows from operations. The Company's current cash
balance will support the proposed Tender Offer, ongoing organic
investment initiatives and current working capital commitments.
XLMedia remains a highly cash generative business and as such will
continue to maintain a progressive dividend policy, distributing at
least 50 per cent. of retained earnings.
The Company will publish its half year results for the six
months ended 30 June 2019 in September 2019.
Information on the Company
XLMedia is a performance marketing company operating a large
portfolio of informational and content rich websites globally. Its
websites act as a conduit to channel users to its clients, the
majority of which address two key products - gambling and personal
finance. The Group also uses in-house media buying capabilities
which it deploys to support its core publishing division.
The Group's publishing activities comprise of numerous
informational websites and mobile sites which attract millions of
users across numerous countries in their local language. These
sites attract paying users and direct them to online businesses in
return for performance-based payments, which are predominantly
based on revenue share and cost per acquisition.
The Company is currently focused on further building its
publishing business within the established gambling sector, as well
as growing its presence in the personal finance space, where the
Directors believe that there exists a significant market
opportunity in North America. In order to establish its footprint,
XLMedia has undertaken a number of acquisitions in this space, most
notably greedyrates.ca and moneyunder30.com, and the Directors
remain focused on broadening the Group's exposure to this growing
sector.
In addition, the Company is closely monitoring the US gambling
market, which continues to benefit from the potential introduction
of legislation and regulation across various States. XLMedia is now
actively investing in building and developing a more comprehensive
portfolio of publishing assets to support its entry into this
market alongside investigating potential strategic acquisitions. As
previously announced, in order to capitalise on this potential
market opportunity, the Company has committed to spend $7 million
over the next three years on targeting the US gambling market in
particular.
The Company is therefore focused on the following key growth
initiatives:
-- A strengthened focus on publishing activities as a core
profit driver with an emphasis on gambling and personal
finance;
-- Further expanding the Company's footprint in the nascent US
gambling sector, which offers significant growth potential; and
-- Ongoing investment in technology whilst continuing to
evaluate selective earnings accretive acquisitions.
Update on share buyback programme
On 18 December 2018, the Board announced a $10 million share
buyback programme for the Company's Shares. As part of its broader
strategy to deliver shareholder value, coupled with the recent
weakness in the Company's share price, the Board concluded that it
was an opportune moment to undertake such an initiative, alongside
maintaining its progressive dividend policy. At the Company's
Annual general Meeting on 29 May 2019, authority to continue the
share buyback programme was given and on 4 June 2019, the Company
announced it would be commencing a further $10 million
programme.
Through these programmes, to date the Company has acquired
13,548,743 Shares at an aggregate cost of approximately $10.8
million. These Shares have been acquired and held in treasury.
On the date of this announcement, the existing buyback programme
shall cease and no additional purchases shall be made pursuant to
it.
Background to and reasons for the Tender Offer
On 26 February 2019, the Company announced its intention to
reduce activity in non-core, low margin media activities, with a
view to focusing on the higher margin publishing activity, leading
to an expected $30 million reduction in revenues in 2019. The
reduction alongside investment in development of new publishing
assets have led to an adjusted EBITDA reduction of between $6-7
million for 2019. This decision was made proactively by the Board
with a view to delivering higher profit margins and better quality
of earnings for Shareholders.
Despite some recent share price momentum, the Directors believe
that the full potential of the Company, as highlighted in the
'Information on the Company' section above, is not reflected in the
price of 72.75 pence per Share (as at close of business on 15 July
2019), and that the Shares continue to trade at a significant
discount to quoted peers.
The Company has been built on the success of its publishing
assets and the Directors firmly believe in the growth potential for
the business by focusing on such assets in both the gambling and
personal finance verticals going forward.
In light of these considerations, the Board has concluded that,
in the interests of both effective capital management and utilising
the Company's strong net cash position alongside ongoing working
capital expenditure and the Company's future investment plans, a
tender offer offers the most efficient use of the Company's excess
cash at this point in time. A tender offer is therefore being
proposed to Shareholders on the Company's Register on the Record
Date (being close of business on 14 August 2019).
The Board intends to continue its commitment to maintaining a
dividend policy of paying out at least 50 per cent. of net profit
and will continue to evaluate selective publishing acquisition
opportunities, which the Board considers could accelerate earnings
growth.
The Tender Offer
The key points of the Tender Offer are as follows:
-- the Tender Offer will be restricted to 19,675,000 Shares,
representing approximately 9.51 per cent. of the Shares in issue
(excluding any Shares held in treasury) on the Record Date;
-- each Shareholder (other than Restricted Shareholders) will be
able to tender up to 9.51 per cent. of his or her holding (rounded
down to the nearest whole number of Shares), with such tenders
being satisfied in full ("Basic Entitlement");
-- each Shareholder will also be able to tender Shares in excess
of his or her Basic Entitlement, but such excess tenders will only
be satisfied on a pro rata basis to the extent that other
Shareholders tender less than (or none of) their Basic Entitlement;
and
-- the Tender Price will be fixed at 80 pence per Share which
represents a premium of approximately 10 per cent. to the
mid-market price of a Share at the close of business on 15 July
2019, the latest practicable day before the printing of the
Circular.
The Tender Offer will be implemented by means of on-market
purchases by Berenberg, which will, as principal, purchase the
Shares tendered (subject to the overall limit of the Tender Offer)
at the Tender Price and, on the completion of those purchases and
in accordance with the Repurchase Agreement, sell them on to the
Company at the Tender Price by way of an on-market transaction. The
Shares that the Company purchases from Berenberg will be held in
treasury and the number of Shares in issue carrying voting rights
reduced accordingly. The Company will fund the purchase from its
existing cash resources.
The Tender Offer is conditional on the Tender Offer Resolution
being passed at the Extraordinary General Meeting. It is also
subject to certain further conditions, which are set out in the
Circular. In addition, the Tender Offer may be terminated in
certain circumstances as set out in paragraph 3 of Part 3 of the
Circular.
Your attention is drawn to the letter from Berenberg in Part 2
of the Circular and to Part 3 of the Circular, which constitute the
terms and conditions of the Tender Offer.
Extraordinary General Meeting
The implementation of the Tender Offer is conditional upon the
passing of the Tender Offer Resolution at the Extraordinary General
Meeting. A notice convening the General Meeting is set out in Part
7 of the Circular.
The Tender Offer Resolution will be proposed at the General
Meeting as a special resolution to seek Shareholder approval for
the Company to make an on-market purchase of up to a maximum of
19,675,000 Shares from Berenberg in connection with the Tender
Offer. Shareholders' tendered shares will be purchased at the
Tender Price pursuant to the Tender Offer. The authority sought by
way of the Tender Offer Resolution will expire on the earlier of:
(1) the completion of the Tender Offer or (2) the date falling 18
months from the date of the passing of the Tender Offer
Resolution.
EXPECTED TIMETABLE
Publication of the Circular 16 July 2019
Tender Offer opens 8.00 a.m. on 17 July 2019
Latest time for receipt of proxy 10.00 a.m. on 14 August
forms and CREST proxy instructions 2019
Latest time and date for receipt 1.00 p.m. on 14 August 2019
of Tender Forms and TTE Instructions
in CREST for Tender Offer
Record Date for Tender Offer close of business on 14
August 2019
Result of Tender Offer announced 15 August 2019
General Meeting 10.00 a.m. on 16 August
2019
Payments through CREST made in respect 23 August 2019
of Shares held in uncertificated
form successfully tendered
CREST accounts settled in respect 23 August 2019
of unsold tendered Shares held in
uncertificated form
Cheques despatched in respect of 23 August 2019
Shares held in certificated form
successfully tendered
Balancing certificates despatched by 29 August 2019
in respect of unsold tendered Shares
held in certificated form
Notes to expected timetable:
1. Each of the times and dates referred to in the expected
timetable above and elsewhere in this announcement may be extended
or brought forward at the discretion of the Company. If any of the
above times and/or dates change, the revised time(s) and/or date(s)
will be notified to Shareholders by an announcement through a
Regulatory Information Service.
2. All times referred to in this announcement are, unless
otherwise stated, references to London time.
Recommendation
The Directors believe that the implementation of the Tender
Offer is in the best interests of the Company and the Shareholders
as a whole. Therefore, the Directors unanimously recommend that you
vote in favour of the Tender Offer Resolution as they intend to do
so in respect of their own interests in 6,181,222 Shares in
aggregate, representing approximately 2.98 per cent. of the Shares
currently in issue. Each of the Directors who holds Shares has
stated that he will not tender any Shares equating to his Basic
Entitlement.
The Board makes no recommendation to Shareholders as to whether
or not to tender their Shares pursuant to the Tender Offer. Whether
or not Shareholders decide to tender their Shares will depend on,
among other things, their view of the Company's prospects and their
own individual circumstances, including their tax position, on
which they should seek their own independent advice.
For further enquiries, please contact:
XLMedia plc via Vigo Communications
Chris Bell, Non-executive Chairman
Ory Weihs, Chief Executive Officer
www.xlmedia.com
Vigo Communications Tel: 020 7390 0233
Jeremy Garcia / Fiona Henson / Simon
Woods
www.vigocomms.com
Cenkos Securities plc (Nomad and Joint Tel: 020 7397 8900
Broker)
Giles Balleny / Callum Davidson
www.cenkos.com
Berenberg (Joint Broker) Tel: 020 3207 7800
Chris Bowman / Mark Whitmore / Simon
Cardron
www.berenberg.com
IMPORTANT INFORMATION
The Directors and the Company accept responsibility, both
collectively and individually, for the information contained in
this announcement and compliance with the AIM Rules.
Joh. Berenberg, Gossler & Co. KG, London Branch
("Berenberg"), which is authorised and regulated in Germany by the
German Federal Financial Supervisory Authority (BaFin) and subject
to limited regulation by the FCA, is acting solely in its capacity
as joint broker to XLMedia PLC and for no one else, including any
recipient of the Circular, in connection with the Tender Offer and
other matters referred to in the Circular and will not be
responsible to anyone other than XLMedia PLC for providing the
protections afforded to clients of Berenberg or for affording
advice in relation to the Tender Offer or any other matter referred
to in this announcement or the Circular.
This announcement does not constitute an offer to purchase, or
solicitation of an offer to sell, Shares in any jurisdiction in
which, or to or from any person to or from whom, it is unlawful to
make such offer or solicitation under applicable securities
laws.
This announcement and the information contained herein is for
background purposes only and does not purport to be full or
complete. It does not constitute or form part of, and should not be
construed as, any offer, invitation or recommendation to purchase,
sell or subscribe for any securities in any jurisdiction and
neither the issue of the information nor anything contained herein
shall form the basis of or be relied upon in connection with, or
act as an inducement to enter into, any investment activity.
No reliance may be placed for any purpose on the information
contained in this announcement or its accuracy or completeness. The
information in this announcement is subject to change. Nothing in
this announcement should be interpreted as a term or condition of
the Tender Offer. Shareholders should not participate in the Tender
Offer except on the basis of information in the Circular which
gives further details of the Tender Offer.
Forward-looking statements
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will", or
"should" or, in each case, their negative or other variations or
comparable terminology. These forward-looking statements include
matters that are not historical facts. They appear in a number of
places throughout this announcement and include statements
regarding the Directors' current intentions, beliefs or
expectations concerning, among other things, the Group's results of
operations, financial condition, liquidity, prospects, growth,
strategies and the Group's markets. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances. Actual results and
developments could differ materially from those expressed or
implied by the forward-looking statements. Forward-looking
statements may and often do differ materially from actual results.
Any forward-looking statements in this announcement are based on
certain factors and assumptions, including the Directors' current
view with respect to future events and are subject to risks
relating to future events and other risks, uncertainties and
assumptions relating to the Group's operations, results of
operations, growth strategy and liquidity. Whilst the Directors
consider these assumptions to be reasonable based upon information
currently available, they may prove to be incorrect. Save as
required by law or by the AIM Rules, none of the Company, its
nominated adviser, Berenberg nor their respective directors,
partners,
officers or employees undertakes any obligation to publicly
release the results of any revisions to any forward-looking
statements in this announcement that may occur due to any change in
the Directors' expectations or to reflect events or circumstances
after the date of this announcement.
Overseas Shareholders
The making of the Tender Offer to persons outside the United
Kingdom may be prohibited or affected by the relevant laws of the
overseas jurisdiction. Shareholders with registered or mailing
addresses outside the United Kingdom or who are citizens or
nationals of, or resident in, a jurisdiction other than the United
Kingdom should read paragraph 7 of Part 3 of the Circular. It is
the responsibility of all Overseas Shareholders to satisfy
themselves as to the observance of any legal requirements in their
jurisdiction, including, without limitation, any relevant
requirements in relation to the ability of such persons to complete
and return a Tender Form.
Notice for US Shareholders
The Tender Offer relates to securities of a non-US company that
is incorporated in Jersey and is subject to the disclosure
requirements, rules and practices applicable to companies listed in
the United Kingdom, which differ from those of the United States in
certain material respects.
The Circular has been prepared in accordance with UK style and
practice for the purpose of complying with English law, Jersey law
and the AIM Rules for Companies of the London Stock Exchange, and
US Shareholders should read the entire Circular, including Part 4
(Taxation) of the Circular. The financial information relating to
the Company included in the Circular has not been prepared in
accordance with generally accepted accounting principles in the
United States and thus may not be comparable to financial
information relating to US companies. The Tender Offer is not
subject to the disclosure and other procedural requirements of
Regulation 14D under the United States Securities Exchange Act of
1934, as amended (the "US Exchange Act"). The Tender Offer will be
made in the United States in accordance with the requirements of
Regulation 14E under the US Exchange Act to the extent applicable.
Certain provisions of Regulation 14E under the US Exchange Act are
not applicable to the Tender Offer by virtue of Rule 14d-1(d) under
the US Exchange Act. US Shareholders should note that the Shares
are not listed on a US securities exchange and the Company is not
subject to the periodic reporting requirements of the US Exchange
Act and is not required to, and does not, file any reports with the
SEC thereunder.
It may be difficult for US Shareholders to enforce certain
rights and claims arising in connection with the Tender Offer under
US federal securities laws since the Company is located outside the
United States and most of its officers and directors reside outside
the United States. It may not be possible to sue a non-US company
or its officers or directors in a non-US court for violations of US
securities laws. It also may not be possible to compel a non-US
company or its affiliates to subject themselves to a US court's
judgment.
To the extent permitted by applicable law and in accordance with
normal UK practice, the Company, Berenberg or any of their
respective affiliates, may make certain purchases of, or
arrangements to purchase, Shares outside the United States during
the period in which the Tender Offer remains open for acceptance,
including sales and purchases of Shares effected by Berenberg
acting as market maker in the Shares. These purchases, or other
arrangements, may occur either in the open market at prevailing
prices or in private transactions at negotiated prices. In order to
be excepted from the requirements of Rule 14e-5 under the US
Exchange Act by virtue of Rule 14e-5(b)(12) thereunder, such
purchases, or arrangements to purchase, must comply with applicable
English law and regulation, including the AIM Rules for Companies
of the London Stock Exchange, and the relevant provisions of the US
Exchange Act. Any information about such purchases will be
disclosed as required in the UK and the United States and, if
required, will be reported via the Regulatory News Service of the
London Stock Exchange and will be available on the London Stock
Exchange website at http://www.londonstockexchange.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TENGUGDRBUBBGCL
(END) Dow Jones Newswires
July 16, 2019 02:00 ET (06:00 GMT)
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