TIDMJWNG
RNS Number : 9839F
Jaywing PLC
27 February 2018
This announcement contains inside information as stipulated
under the Market Abuse Regulations (EU) no. 596/2014 ("MAR")
27 February 2018
Jaywing plc
("Jaywing" or the "Company")
Agreement to Acquire Frank Digital Pty Ltd
Placing to raise up to GBP1.3 million
Jaywing plc (AIM: JWNG), a UK-based agency specialising in the
application of data science, is pleased to announce that it has
entered into an agreement to acquire Frank Digital Pty Ltd ("Frank
Digital"), a digital marketing agency based in Sydney, Australia.
Furthermore, the Company announces a conditional Placing, subject
to Shareholder approval, to raise up to GBP1.3 million to finance
the initial consideration payable in respect of the
Acquisition.
Background to and reasons for the Acquisition
Jaywing's operations in Sydney have continually expanded since
its acquisition of search agency Digital Massive in 2016, which now
operates under the Jaywing brand. Total spend on digital
advertising in Australia is expected to grow materially over the
next few years, increasing by 29 per cent. from 2017 to 2021
(Source: www.eMarketer.com). Since it established itself in the
region, Jaywing has experienced strong growth in Australia,
alongside increasing demand from customers for a wider range of
products and services. This strategic acquisition of Frank Digital
serves to meet this customer demand and will further consolidate
Jaywing's position in the growing Australian market, delivering
additional scale and augmenting its existing services with website
and digital campaign expertise.
The improved offering, with a broader set of products and
services, is supported by current client opportunities and allows
Jaywing greater opportunity for cross-sales. In the UK, Jaywing has
seen success in cross-selling its products and services. In July
2017, Jaywing announced that it had increased the proportion of
clients taking more than one service line from 1 in 4 in the
previous year, to 1 in 3 of its top 50 clients.
The Directors believe that by being part of Jaywing, Frank
Digital can accelerate its growth by leveraging strategic and
operational support from the UK.
Commenting on the deal, Jaywing plc CEO Rob Shaw, said:
"Our acquisition of Digital Massive in 2016 has performed well,
with growth in Australia outstripping that of the UK. By creating a
larger agency in Australia that is consistent with our
international growth strategy, we will be able to take further
advantage of a growing market and consolidate our position as an
agency with a reputation for excellence. Matt and his team are a
great cultural fit, with an existing relationship between them and
our existing operation across a number of clients."
Further information on Frank Digital
Frank Digital specialises in digital marketing, websites and
mobile applications. It provides services to
a broad range of companies in various jurisdictions, including
global investment manager AMP Capital, major hospitality firm
Merivale, and leading multi-platform publisher Bauer Media. Frank
Digital has experienced solid revenue growth, with a 46 per cent.
increase from FY 2016 to FY 2017.
Frank Digital was founded in 2009 and its current director, Matt
Barbelli will remain employed in the business going forward. For
the 12 months ended June 2017, Frank Digital generated revenue and
EBITDA of AUS$2,184k and AUS$379k respectively. As at 30 September
2017, Frank Digital had net assets of AUS$198k.
Transaction Structure and the Acquisition Agreement
Pursuant to the Acquisition Agreement, the Company has agreed to
purchase 75% of the issued share capital of the Target Company for
a consideration of AUS$1.2 million (subject to working capital and
net debt adjustments) payable in cash on completion.
Subject to the achievement of certain EBITDA targets, the
Company will pay to the Seller two further earn out payments for
the periods from 1 July 2018 to 30 June 2019 and from 1 July 2019
to 30 June 2020 subject to a maximum aggregate payment of AUS$1.2
million.
On completion the Company will be granted an option to buy, and
the Seller will be granted an option to sell, at a price of up to
AUS$2.35 million the remaining 25% of the shares in the Target
Company, such options being exercisable on the fourth anniversary
of completion or at the time the Seller's employment is terminated.
The Company has the right to settle up to 25% of the amount payable
pursuant to these options by the allotment of Ordinary Shares.
The maximum consideration payable by the Company for the Target
Company pursuant to all of the above is AUS$4.75 million.
The acquisition is expected to be earnings enhancing within 12
months from completion.
Details of the Placing
Jaywing proposes to raise up to GBP1.3 million gross
(approximately GBP1.2 million net of expenses) through the issue of
the Placing Shares at the Issue Price through Cenkos. The Placing
is not underwritten.
The Issue Price of 20 pence per new Ordinary Share represents a
discount of 21.6 per cent. to the Closing Price of 25.5 pence on 26
February 2018, the latest Business Day prior to announcement of the
Acquisition and the Placing.
The Placing Agreement contains certain warranties and
indemnities from the Company in favour of Cenkos and is
conditional, inter alia, upon:
(a) Shareholder approval of the Resolutions at the General Meeting;
(b) the Placing Agreement having become unconditional in all
respects (save for the condition relating to Admission) and not
having been terminated in accordance with its terms prior to
Admission; and
(c) Admission becoming effective not later than 8.00 a.m. on 15
March 2018 or such later time and/or date as the Company and Cenkos
Securities may agree, being not later than 29 March 2018.
The Placing Agreement contains customary warranties and an
indemnity from the Company in favour of Cenkos together with
provisions which enable Cenkos to terminate the Placing Agreement
in certain circumstances prior to Admission (as applicable),
including where any warranties are found to be untrue, inaccurate
or misleading in any material respect or in the event of a material
adverse change in the financial position or prospects of the
Company's group in the context of the Placing or Admission.
Application will be made for the Placing Shares to be admitted
to trading on AIM. It is expected that Admission will occur at
8:00am on 15 March 2018.
The Placing is conditional on, amongst other things, the
agreement providing for the Acquisition becoming unconditional save
in respect of conditions relating to the Placing, shareholder
approval and admission of the Placing Shares to trading on AIM.
Following Admission, the Company will have up to 93,432,217
Ordinary Shares in issue, of which 99,622 are held in Treasury.
Accordingly, the total number of voting rights of the Company's
Ordinary Shares will be up to 93,332,595.
The Placing Shares will, when issued and fully paid, rank pari
passu in all respects with the Existing Ordinary Shares, including
the right to receive all dividends and other distributions
declared, made or paid after the date of Admission.
The Directors intend to subscribe for, in aggregate,
approximately GBP95k in the Placing. A further announcement will be
made in due course following their acquisition of Placing
Shares.
Use of proceeds of the Placing
The net proceeds of the Placing, expected to be up to
approximately GBP1.2 million, will be used as follows:
-- Approximately GBP0.7 million up-front consideration; and
-- Approximately GBP0.5 million deferred consideration
Circular and General Meeting
The Circular to Shareholders detailing the transaction is today
being posted to Shareholders containing a notice of the General
Meeting and the Form of Proxy. The Circular will also be available
to view on the Company's website at
https://investors.jaywing.com.
The Form of Proxy should be completed and returned in accordance
with the instructions thereon so as to be received by Link Asset
Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU
as soon as possible and in any event not later than two Business
Days before the time of the General Meeting. Completion and return
of the Form of Proxy will not prevent a Shareholder from attending
and voting at the General Meeting should he/she/it so wish.
Recommendation
The Directors believe the Acquisition and the Placing to be in
the best interests of the Company and its Shareholders as a whole.
Accordingly, the Directors unanimously recommend Shareholders to
vote in favour of the Resolutions as they intend so to do in
respect of their beneficial shareholdings amounting to 10,513,254
Existing Ordinary Shares.
Expected Timetable of Principal Events
Announcement of the Acquisition 27 February 2018
and Placing
Posting of Circular 27 February 2018
Latest time and date for receipt 11:00 on 12 March
of Forms of Proxy 2018
General Meeting 11:00 on 14 March
2018
Admission and commencement of 8.00 a.m. 15
dealings of the Placing Shares March 2018
Placing Shares credited to CREST 15 March 2018
stock accounts
Despatch of definitive share certificates Week commencing
for Placing Shares 19 March 2018
Notes:
(i) References to times in this RNS are to London time (unless otherwise stated).
(ii) If any of the above times or dates should change, the
revised times and/or dates will be notified by an announcement to
an RIS.
(iii) The timing of the events in the above timetable is indicative only.
Definitions
"Acquisition" the proposed acquisition by
the Company of the entire issued
share capital of Frank Digital
PTY LTD described in this Document
"Acquisition Agreement" the share purchase agreement
dated 27 February 2018 relating
to the Acquisition, made between
the Company and the Seller,
a summary of which is set out
in paragraph 4 of the letter
from the Executive Chairman
of the Company set out in the
Circular
"Admission" admission of the Placing Shares
to trading on AIM
"AIM" AIM, a market operated by the
London Stock Exchange
"AIM Rules" the AIM rules for companies
published by London Stock Exchange
"AUS$" Australian dollars
"Business Day" a day (other than a Saturday
or Sunday) on which commercial
banks are open for general
business in London, England
"Cenkos" Cenkos Securities plc (registered
number 05210733)
"Closing Price" the closing middle market quotation
of an Existing Ordinary Share
as derived from the AIM Appendix
to the Daily Official List
of the London Stock Exchange
"Company" or "Jaywing" Jaywing plc (registered number
5935923)
"Completion" completion of the Acquisition,
pursuant to the Acquisition
Agreement
"CREST" the relevant system (as defined
in the CREST Regulations) in
respect of which Euroclear
is the Operator (as defined
in the CREST Regulations)
"CREST Manual" the rules governing the operation
of CREST, consisting of the
CREST Reference Manual, CREST
International Manual, CREST
Central Counterparty Service
Manual, CREST Rules, Registrars
Service Standards, Settlement
Discipline Rules, CREST Courier
and Sorting Services Manual,
Daily Timetable, CREST Application
Procedures and CREST Glossary
of Terms (all as defined in
the CREST Glossary of Terms
promulgated by Euroclear on
15 July 1996 and as amended
since) as published by Euroclear
"CREST member" a person who has been admitted
by Euroclear as a system member
(as defined in the CREST Regulations)
"CREST Participant" a person who is, in relation
to CREST, a system-participant
(as defined in the CREST Regulations)
"CREST Regulations" the Uncertificated Securities
Regulations 2001 (SI 2001/3755)
(as amended)
"CREST sponsor" a CREST Participant admitted
to CREST as a CREST sponsor
"CREST sponsored a CREST member admitted to
member" CREST as a sponsored member
(which includes all-CREST personal
members)
"Directors" or the directors of the Company
"Board"
"Document" this document which for the
avoidance of doubt does not
comprise a prospectus (under
the Prospectus Rules) or an
admission document (under the
AIM Rules)
"Enlarged Group" the Company and its subsidiaries
following Completion
"Enlarged Share the issued ordinary share capital
Capital" of Jaywing immediately following
Admission
"Euroclear" Euroclear UK & Ireland Limited,
the operator of CREST
"Existing Ordinary the Ordinary Shares in issue
Shares" at the date of this Document
"Form of Proxy" the form of proxy accompanying
this Document for use at the
General Meeting
"FCA" the Financial Conduct Authority
of the UK
"FSMA" the Financial Services and
Markets Act 2000 (as amended)
"General Meeting" the general meeting of the
Company as described in this
Document, notice of which is
set out at the end of this
Document
"Issue Price" 20 pence per Placing Share
"Link Asset Services" a trading name of Link Group
"Listing Rules" the Listing Rules of the UKLA
made in accordance with section
73A(2) of FSMA
"London Stock Exchange" London Stock Exchange plc
"Official List" the Official List of the UK
Listing Authority
"Ordinary Shares" ordinary shares of 5 pence
each in the capital of the
Company
"Overseas Holders" Shareholders with registered
addresses in, or who are citizens,
residents or nationals of,
jurisdictions outside the UK
"Participant ID" the identification code or
membership number used in CREST
to identify a particular CREST
member or other CREST Participant
"Placees" those persons who have conditionally
agreed to subscribe for the
Placing Shares under the Placing
"Placing" the proposed issue and allotment
at the Issue Price of the Placing
Shares to the Placees as described
in this Document
"Placing Agreement" the conditional agreement dated
27 February 2018 and made between
Cenkos and the Company in relation
to the Placing, further details
of which are set out in the
Circular
"Placing Shares" the 6,536,450 Ordinary Shares
to be issued and allotted to
the Placees pursuant to the
Placing
"Prospectus Rules" the Prospectus Rules made in
accordance with EU Prospectus
Directive 2003/7l/EC
"Resolutions" the resolutions to be proposed
at the General Meeting as set
out in the notice of General
Meeting at the end of this
Document
"RIS" a regulatory information service
as defined by the Listing Rules
"Seller" Matteo Barbelli
"Shareholders" holders of Ordinary Shares
"Target Company" Frank Digital PTY LTD
"UK" or "United the United Kingdom of Great
Kingdom" Britain and Northern Ireland
"UK Listing Authority" the UK Listing Authority, being
or "UKLA" the FCA acting as competent
authority for the purposes
of Part IV of FSMA
Enquiries:
Jaywing plc (www.jaywingplc.com)
Michael Sprot (Company Secretary) Tel: 0114 281 1200
Cenkos Securities plc
Nicholas Wells/Callum Davidson (Nomad) Tel: 0207 397 8920
This information is provided by RNS
The company news service from the London Stock Exchange
END
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