Deals
Macromac plc Acquires Smile Interactive Co., Ltd, Thailand
The Board of Macromac (AIM: MACC) is pleased to announce that the Company has today entered into a share sale & purchase agreement (the "SPA") for the acquisition of Smile Interactive Co., Ltd, Thailand ("Smile"), a mobile content Gateway provider in Thailand, through the purchase of a 49% direct interest in Smile and a 51% indirect interest in Smile via an investment arm, Future Max Co., Ltd, which will be 49% controlled by Macromac and 51% controlled by Smile (the "Acquisition"). The maximum total consideration payable by Macromac for the Acquisition is Baht 110 million (equivalent to approximately £2.0 million), to be settled via a cash payment of Baht 10 million (equivalent to approximately £180,000) and Baht 100 million (equivalent to approximately £1.82 million) to be settled through the issue of up to 4,409,000 new ordinary shares in the Company (the "Consideration Shares") at 42p per Consideration Share (the "Issue Price") or up to a maximum of 4.19% of the total shares issued and outstanding of the Company as at the date of issue.
Macromac has developed and operates a proprietary application-to-person mobile messaging platform (the Macromac Messaging Platform, or MMP) which allows delivery of mobile data between content providers and brand owners to mobile users, via mobile telecom providers. Using the MMP, the Group offers bulk messaging and premium messaging services to content providers and brand owners. The Group's other solutions include enterprise management software and internet marketing solutions for small to medium enterprises.
Smile is a private limited company established and operating under the laws of Thailand, with its main business being the ownership of a mobile content Gateway, which provides its customers with digital marketing solutions across the mobile phone networks. For the year ended 31 December 2013, Smile's revenue amounted to Baht 145.38 million (equivalent to approximately £2.64 million), profit before tax amounted to Baht 15.18 million (equivalent to approximately £0.28 million), while the net assets of Smile as at 31 December 2013 amounted to Baht 12.81 million (equivalent to approximately £0.23 million). Of the revenue generated by Smile in 2013, 39 per cent of the contribution came though business generated by Macromac. Smile currently has 12 employees based in Bangkok, Thailand.
Under the terms of the Acquisition, the cash consideration will be settled within 90 days from the date of the SPA. The share consideration will be issued on a deferred consideration basis over a period of five years in five tranches with the number of Consideration Shares to be issued to the vendors of Smile being based on Smile's audited profit after tax for the financial years ending 31 December 2014 to 31 December 2018. The Consideration Shares are to be issued on a multiple of 2x for the year ending 31 December 2014 and on a multiple of 1.5x for the remaining four years ending 31 December 2018. The maximum number of new ordinary shares that could be issued to the vendors of Smile as consideration for the Acquisition is capped at 4,409,000 Consideration Shares (representing 4.19% of the current issued shares of the Company) or up to a maximum of 4.19% of the total shares issued and outstanding of the Company as at the date of issue.
Upon completion of the acquisition of Smile, Mr Eakapol Tangpaosak will be appointed as the Chief Executive Officer of Smile. Mr Eakapol Tangpaosak was the founder of Smile, is the current managing director and has been crucial in the expansion of Smile since its formation in 2003.
Background to and reasons for the Acquisition
Smile is Macromac's existing mobile messaging services partner in Thailand and has been working in partnership with the Company since December 2012. Smile has partnership status with all three mobile telecom operators in Thailand (being AIS, DTAC and True Move) providing a "gateway" service for content providers and content aggregators, allowing them access to the three telecom networks and ultimately to the mobile end user. The Acquisition will allow Macromac to quickly expand its reach into Thailand's mobile messaging market, by providing Macromac with direct access to Thailand's mobile operators.
Through the acquisition of Smile, Macromac will be able to enter the Thailand messaging services market in an accelerated manner due to Smile's 10 years' of experience in this industry and its existing relationships with the telecom operators and other market participants in Thailand. Thailand has an estimated 96 million mobile users as at the end of Q1 2014, compared to Malaysia's 43 million mobile users, while the smart phone penetration rate in Thailand is just 25%. With an estimated population of 67 million, the mobile penetration rate in Thailand is approximately 144% (according to Office of The National Broadcasting and Telecommunications Commission (NBTC) Thailand).
The acquisition of Smile follows on from Macromac establishing a permanent presence in Thailand in late 2013 through the opening of an office in Bangkok.
Michael Lew, Executive President of Macromac, commented:
"The acquisition of Smile is Macromac's first major transaction since our AIM IPO in September 2013. The Board has always intended for Macromac to participate in Thailand's messaging services business in an increased way in 2014 and it is confident that success in Thailand will raise Macromac's industry profile to help it become a leading provider of mobile content services in ASEAN. The Smile transaction will also fulfil our strategic objective of geographically expanding into neighbouring countries, which was one of the primary objectives for listing on AIM last year."
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