Click here to close now.

Welcome!

News Feed Item

XLMedia plc (“XLMedia” or “the Group”) Acquisition of a Social Gaming Marketing Company

XLMedia (AIM: XLM), a leading provider of digital performance marketing services, is pleased to announce the acquisition of ExciteAd Digital Marketing Ltd ("EDM"), a leading social and mobile gaming marketing company, for a consideration of up to US$19 million in cash and shares. The acquisition is expected to be immediately earnings enhancing and is highly complementary to XLMedia’s Media division.

EDM, which trades under the name "DAU-UP" (www.dauup.com), specialises in social and mobile advertising specifically targeted at ‘user acquisition’ for social gaming applications. EDM's principal geographical market is the US, in addition to other English and German speaking markets. EDM provides marketing services primarily to game developers in social and mobile platforms for either a performance based fee, such as CPI or cost per installation, or a management fee based on marketing spend.

EDM has an excellent track record of growth, reflecting the online expansion of the social and mobile gaming market. For the 12 months ended 30 June 2014, EDM delivered revenues of $12.8m and profit before tax, excluding share based payments, of $3.0m (Management accounts, Non GAAP). EDM was established in 2010, is based in Israel and employs 27 staff.

Social Gaming, which involves playing online games (such as Casino themed, strategy and adventure based) on social media or community sites, is experiencing significant increased demand across web, smartphones, and tablets platforms. According to market specialists Technavio, the demand for these games is expected to continue to see continued growth with an estimated CAGR of 24% in the US alone between 2012 and 2016. This strong growth is driven by the tremendous demand in the mobile and smartphone markets and the free availability of many of these games.

Strategic Rationale

The acquisition is in line with the Group’s strategy, as set out during its IPO in March 2014, to expand and diversify its activities into complementary areas and act as a consolidator in a fragmented market.

EDM is a highly complementary fit with XLMedia’s existing business, delivering a range of synergies and strategic benefits. The acquisition will diversify the business into new products and markets, targeting a new customer base, as well as providing enhanced growth opportunities within existing markets. In particular, benefits for the Group include:

  • Strong growth in a fast paced and expanding market – social and mobile games and applications are a fast expanding market which is not subject to the same regulatory regime as the online gambling market. EDM will provide the Group additional growth opportunities in this new area.
  • Social expertise – EDM's expertise in social and mobile marketing supplements XLMedia's knowledge and understanding in marketing online gambling.
  • Mobile expertise – approximately 50% of EDM’s revenues are generated through mobile users. Mobile users have also become a significant part of the online gambling industry, with an anticipated 44% share of the global interactive gambling market by 2018, according to market research provider H2 Gambling Capital (H2).
  • Revenue streams from regulated products and markets – social gaming, which does not involve real money gambling, does not require a licence. Expanding XLMedia's product range into this sector will therefore strengthen the Group's position in regulated online gambling markets such as the US and UK.
  • A new customer base – EDM’s customers typically comprise game developers in social platforms, presenting a new target audience for XLMedia.
  • An expanded geographic reach – EDM's principal market is the US, with additional revenues derived from other English and German speaking markets as well as other countries outside of XLMedia’s core Scandinavian markets, representing diversification for the Group into new geographies.
  • Strong analytic systems – EDM uses its proprietary internal systems for both analysis of performance as well as for campaign definitions and building. Integrating these tools into XLMedia's own network will contribute to the Group's performance and improvement.

Consideration and key terms

Under the terms of the share purchase agreement, the Group will acquire (on a debt free cash free basis) the entire issued share capital of EDM from its current shareholders which include Mr.Idan Nizri, the principal shareholder, founder and CEO, as well as other investors (the “Sellers”) for a total consideration of up to US$19 million (approximately £11.4 million). XLMedia will pay US$12 million in cash immediately and two additional payments of up to an aggregate US$7 million will be payable based on EDM’s EBITDA performance during the first and second years after 1 July 2014, 71% of which may (at XLMedia’s discretion) be satisfied by the issue of new ordinary shares in XLMedia(“XLMedia Shares”). The value of any new XLMedia Shares issued will be based on an agreed trailing average of the closing days trading price prior to election to issue the relevant shares. Each portion of any share consideration will be subject to an appropriate slow release arrangement. Mr. Nizri will remain with EDM for a minimum period of two years and shall be entitled to a seat on EDM's board of directors.

Commenting on the acquisition, Mr. Ory Weihs, CEO of XLMedia said,

“We are delighted to be announcing the acquisition of EDM, our largest transaction since listing in London. One of the main reasons behind our IPO was to enable the Group to act as a consolidator in highly fragmented markets. Since listing, we have been working hard to execute such deals and are therefore excited to conclude the acquisition of EDM, a global leader in the social and gaming marketing arena."

“EDM represents a highly complementary fit for our business, is immediately earnings enhancing, strengthens our reach in the US, delivers diversification into social gaming and extends our current gambling expertise and customer base. We look forward to working with the EDM team and to continue to execute our stated growth strategy.”

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
"A lot of the enterprises that have been using our systems for many years are reaching out to the cloud - the public cloud, the private cloud and hybrid," stated Reuven Harrison, CTO and Co-Founder of Tufin, in this SYS-CON.tv interview at 16th Cloud Expo, held June 9-11, 2015, at the Javits Center in New York City.
One of the hottest areas in cloud right now is DRaaS and related offerings. In his session at 16th Cloud Expo, Dale Levesque, Disaster Recovery Product Manager with Windstream's Cloud and Data Center Marketing team, will discuss the benefits of the cloud model, which far outweigh the traditional approach, and how enterprises need to ensure that their needs are properly being met.
The time is ripe for high speed resilient software defined storage solutions with unlimited scalability. ISS has been working with the leading open source projects and developed a commercial high performance solution that is able to grow forever without performance limitations. In his session at Cloud Expo, Alex Gorbachev, President of Intelligent Systems Services Inc., shared foundation principles of Ceph architecture, as well as the design to deliver this storage to traditional SAN storage co...
"Plutora provides release and testing environment capabilities to the enterprise," explained Dalibor Siroky, Director and Co-founder of Plutora, in this SYS-CON.tv interview at @DevOpsSummit, held June 9-11, 2015, at the Javits Center in New York City.
To many people, IoT is a buzzword whose value is not understood. Many people think IoT is all about wearables and home automation. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed some incredible game-changing use cases and how they are transforming industries like agriculture, manufacturing, health care, and smart cities. He will discuss cool technologies like smart dust, robotics, smart labels, and much more. Prepare...
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society-changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his session at @ThingsExpo, Jason Mondanaro, Director, Product Management at Metanga, discussed how you can plan to cooperate, partner, and form lasting all-star teams to change the world...
SYS-CON Events announced today that JFrog, maker of Artifactory, the popular Binary Repository Manager, will exhibit at SYS-CON's @DevOpsSummit Silicon Valley, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Based in California, Israel and France, founded by longtime field-experts, JFrog, creator of Artifactory and Bintray, has provided the market with the first Binary Repository solution and a software distribution social platform.
In his session at 16th Cloud Expo, Simone Brunozzi, VP and Chief Technologist of Cloud Services at VMware, reviewed the changes that the cloud computing industry has gone through over the last five years and shared insights into what the next five will bring. He also chronicled the challenges enterprise companies are facing as they move to the public cloud. He delved into the "Hybrid Cloud" space and explained why every CIO should consider ‘hybrid cloud' as part of their future strategy to achi...
"We have a tagline - "Power in the API Economy." What that means is everything that is built in applications and connected applications is done through APIs," explained Roberto Medrano, Executive Vice President at Akana, in this SYS-CON.tv interview at 16th Cloud Expo, held June 9-11, 2015, at the Javits Center in New York City.
"We got started as search consultants. On the services side of the business we have help organizations save time and save money when they hit issues that everyone more or less hits when their data grows," noted Otis Gospodnetić, Founder of Sematext, in this SYS-CON.tv interview at @DevOpsSummit, held June 9-11, 2015, at the Javits Center in New York City.
Containers are changing the security landscape for software development and deployment. As with any security solutions, security approaches that work for developers, operations personnel and security professionals is a requirement. In his session at DevOps Summit, Kevin Gilpin, CTO and Co-Founder of Conjur, will discuss various security considerations for container-based infrastructure and related DevOps workflows.
Internet of Things is moving from being a hype to a reality. Experts estimate that internet connected cars will grow to 152 million, while over 100 million internet connected wireless light bulbs and lamps will be operational by 2020. These and many other intriguing statistics highlight the importance of Internet powered devices and how market penetration is going to multiply many times over in the next few years.
Internet of Things (IoT) will be a hybrid ecosystem of diverse devices and sensors collaborating with operational and enterprise systems to create the next big application. In their session at @ThingsExpo, Bramh Gupta, founder and CEO of robomq.io, and Fred Yatzeck, principal architect leading product development at robomq.io, discussed how choosing the right middleware and integration strategy from the get-go will enable IoT solution developers to adapt and grow with the industry, while at th...
The most often asked question post-DevOps introduction is: “How do I get started?” There’s plenty of information on why DevOps is valid and important, but many managers still struggle with simple basics for how to initiate a DevOps program in their business. They struggle with issues related to current organizational inertia, the lack of experience on Continuous Integration/Delivery, understanding where DevOps will affect revenue and budget, etc. In their session at DevOps Summit, JP Morgenthal...
Agile, which started in the development organization, has gradually expanded into other areas downstream - namely IT and Operations. Teams – then teams of teams – have streamlined processes, improved feedback loops and driven a much faster pace into IT departments which have had profound effects on the entire organization. In his session at DevOps Summit, Anders Wallgren, Chief Technology Officer of Electric Cloud, will discuss how DevOps and Continuous Delivery have emerged to help connect dev...