via NewMediaWire -- Troika Media Group,
Inc. (Nasdaq:TRKA):
Financial Highlights:
Converge Direct, LLC and its affiliated businesses
(collectively, “Converge”) generated approximately $300 million of
revenue and $23 million of adjusted EBITDA for the year ended
December 31, 2021.
Estimated combined adjusted EBITDA over $27
million for CY 2022.
Significantly accretive to adjusted earnings per
share.
Following the closing, it is anticipated that the
majority of the combined business’ revenue will be recurring.
Increased margins per customer relationship
without a significant increase in operating costs with positive
client outcomes arising from deeper client engagements.
Consolidated cost synergies of more than $2
million expected in the first year after closing.
Cantor Fitzgerald & Co. is serving as sole
debt placement agent to Troika Media Group, Inc. in connection
with the transaction.
Troika has a commitment with respect to the
majority of the purchase price in the form a senior secured credit
facility.
Strategic Highlights:
The acquisition of Converge (the “Acquisition”)
creates a global end-to-end branding, marketing, digital
advertising, experiential, analytics-as-service (SAS) and SaaS
technology company with an extraordinary base of major clients.
The Acquisition adds proprietary “HELIX” business
intelligence platform, thereby providing an edge for clients to
maximize their consumer interactions and customer acquisition.
The Acquisition significantly accelerates Troika’s
business model transformation strategy and positions the Company
for future growth and margin expansion.
Post Acquisition service and sector footprint
provides broader downstream recurring revenue base resulting from
minimal client overlap.
Troika Media Group, Inc. (Nasdaq:TRKA) ("TMG" or
"Company"), a brand consultancy and marketing innovations
company that provides integrated branding and
marketing solutions for global brands, today announced
that it has signed a definitive purchase agreement (the “Purchase
Agreement”) to acquire Converge Direct LLC and its affiliates
(collectively, “Converge”), a leading independent marketing and
customer acquisition business for $125
million (collectively, the “Acquisition”). The Acquisition has
been unanimously approved by the Boards of Directors and the
majority of shareholders of both Troika and Converge. The
transaction is expected to close on or before March 15th, subject
to the satisfaction of customary closing conditions.
Since its formation in 2006, Converge and its
affiliates have grown to approximately $300 million in annualized
revenue and $23 million in adjusted EBITDA for the year ending
December 31, 2021. Converge is a leading independent
performance marketing and managed services
business. Converge provides to customer acquisition
services utilizing a broad range of engagement channels in the
digital, offline and emerging media sectors. Converge utilizes a
business intelligence centric approach to its media strategy,
planning and buying to deliver its clients’ customer acquisition
targets and KPIs to achieve scale, efficiency and/or on time lead
fulfillment. Converge’s proprietary solutions and HELIX’s
business intelligent software offers clients best-in-class customer
acquisition metrics. Converge’s 85 full time employees are expected
to join Troika upon the closing of the acquisition and the combined
company will have approximately 200 full time employees.
Transaction Details
Troika has signed a binding purchase agreement to
acquire Converge for total consideration of $125
million. Troika will fund the transaction with a combination
of new debt financing, a restricted stock grant and cash on hand at
closing. Troika has a commitment with respect to the majority of
the purchase price in the form a senior secured credit
facility.
Upon closing, the senior management team of
Converge will enter into long-term Employment Agreements and take
an active leadership role in the combined business. Sid Toama,
formerly Chief Operating Officer of Converge, will join Troika’s
Board of Directors, and serve as President of Troika. Tom
Marianacci, Founder and Chief Executive Officer of Converge will
remain CEO of the Converge entities and be a board advisor to
Troika. Other members of Converge’s Executive Leadership Team have
agreed to join Troika to provide continuity to Troika’s strategy,
growth and leadership.
Cantor Fitzgerald & Co. is serving as sole
debt placement agent in connection with the transaction.
EF Hutton is serving as financial advisor and
Davidoff Hutcher & Citron LLP is serving as legal advisor to
Troika.
Management Commentary
“We are very pleased and excited for the
opportunity to combine our two great businesses and leverage our
collective resources and expertise to accelerate profitable
growth,” said Robert Machinist, Troika’s Chairman and
CEO. “Troika has a deep and long history with major global brands
that rely on us to build trust and drive customer and fan
engagements. The acquisition of Converge will place us in the
growth sweet spot of digital content, data and digital media which
is moving from brand awareness and trial to conversion at
significant scale. With strong top-line growth, solid margins, and
a significant shareowner interest in the combined entities, we
believe this transaction deepens and broadens our digital client
offerings. Accordingly, we expect it that it will
substantially enhance shareholder value.”
Tom Marianacci, Converge Founder and CEO, said,
“As a leading global digital brand consultancy that connects
companies to consumers, combining with Troika’s brand engagement
capabilities is a natural next step in the evolution of Converge
due to our complementary service offerings, client portfolios and
common approach to digital transformation. Our focus on
performance-based marketing, proven data and technology solutions,
and scale will allow us to leverage the deep customer base and
brand building experience that Troika has established over decades
to offer expanded offerings that drive new revenue
opportunities for the combined companies.”
Compelling Strategic and Financial
Benefits
- Significantly Expands Troika’s Presence in the Large and
Growing Digital Media and Performance Marketing Sector.
- Transaction Serves Customers in Various End Markets
Representing Both New and Complementary Client Opportunities:
financial services, consumer products, healthcare & insurance,
travel and leisure, education, media and entertainment,
home improvement products and services, fitness and wellbeing,
and legal services.
- Proprietary HELIX Business Intelligence Platform provides
clients with greater marketing insights.
- Leverages Integrated Technology, Data, e-Commerce and
Mobile Capabilities to Accelerate and Optimize Omnichannel Strategy
for Clients.
- Provides Significant Revenue and Earnings Growth
Opportunity. Converge generated approximately $300
million of revenues and adjusted EBITDA of $23 million for the year
ended December 31, 2021.
- Generates Strong Cash Flow to Support Balanced Capital
Allocation Plans.
- Estimated Combined Adjusted EBITDA over $27 Million for
CY 2022.
- Accretive to adjusted earnings per share.
Converge Highlights
- A data and audience centric customer acquisition business
with responsibility for over $5 billion in media budgets since
inception.
- Expertise in paid digital and offline media buying:
Search Engine Marketing, Search Engine Optimization, Email, SMS,
Display, Social, e‑Marketplaces, Connected TV, Affiliate platforms
as well as Print and Direct Mail media vehicles.
- Responsible for executing over 20 billion ad impressions
annually.
- Exponents of data driven one-to-one mass marketing, hyper
targeted ad serving and custom audience targeting with measurable
media driving financial outcomes.
- Ability to identify and engage consumers and measure
their interaction across multiple personal devices.
- Longstanding Google Premier Partner, Bing Elite Partner,
and Facebook Marketing Partner.
- Deploy proprietary business intelligence platform
“HELIX”, to provide insights on marketing campaign performance,
customer journey tracking and real‑time performance optimization
tactics.
- Built a robust data aggregation platform to utilize
applied analytics maximizing ad engagement and reduce wasted
customer ad touchpoints across all channels.
About Converge Direct LLC
Converge Direct, LLC and affiliates is a media
managed-service, performance marketing and customer acquisition
business. The Company provides complementary services such as
advertising strategy and customized advertising campaigns utilizing
their proprietary attribution analytics SaaS technology platform,
HELIX. The Company is headquartered in Bedford Hills, New York with
branch offices in New York, New York and San Diego, California. The
Company serves customers in various end markets: financial
services, consumer products, healthcare & insurance, travel and
leisure, education, media and entertainment, home improvement,
fitness and wellbeing, and legal services.
Visit: www.convergemarketing.com
About Troika Media Group
Troika Media Group is an end-to-end brand
solutions company that creates both near-term and long-term value
for global brands in entertainment, sports and consumer products.
Applying emerging technology, data science, and world-class
creative, TMG helps brands deepen engagement with audiences and
fans throughout the consumer journey and builds brand equity.
Clients include Apple, Hulu, Riot Games, Belvedere Vodka, Unilever,
UFC, Peloton, CNN, HBO, ESPN, Wynn Resorts and Casinos, Tiffany
& Co., IMAX, Netflix, Sony, Yahoo and Coca-Cola. For more
information, visit www.thetmgrp.com
Forward-Looking Statements
Certain statements in this press release that are
not historical facts are forward-looking statements that reflect
management's current expectations, assumptions, and estimates of
future performance and economic conditions, and involve risks and
uncertainties that could cause actual results to differ materially
from those anticipated by the statements made herein.
Forward-looking statements are generally identifiable by the use of
forward-looking terminology such as "believe," "expects," "may,"
"looks to," "will," "should," "plan," "intend," "on condition,"
"target," "see," "potential," "estimates," "preliminary," or
"anticipates" or the negative thereof or comparable terminology, or
by discussion of strategy or goals or other future events,
circumstances, or effects. Moreover, forward-looking statements in
this release include, but are not limited to, the impact of the
current COVID-19 pandemic, which may limit access to the Company's
facilities, customers, management, support staff, and professional
advisors, and to develop and deliver advanced voice and data
communications systems, demand for the Company's products and
services, economic conditions in the U.S. and worldwide, and the
Company's ability to recruit and retain management, technical, and
sales personnel. Further information relating to factors that may
impact the Company's results and forward-looking statements are
disclosed in the Company's filings with the SEC. The
forward-looking statements contained in this press release are made
as of the date of this press release, and the Company disclaims any
intention or obligation, other than imposed by law, to update or
revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.
Contact:
Troika Media Group
Kevin Aratari
kevin@troikamedia.com
Investor Relations
TraDigital IR
Kevin McGrath
+1-646-418-7002
kevin@tradigitalir.com
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