Obtineo is a combination of Bigmouthmedia, the largest search engine marketing
specialist in Europe, and €40m of new capital committed towards global expansion
of the combined entity
The Boards of Directors of LBI International AB ("LBi") and Obtineo Netherlands
Holding NV ("Obtineo") have unanimously agreed to merge the companies to create
Europe's largest marketing and technology agency.
Transaction highlights:
* The combined entity will:
* * combine LBi's best in class digital media, marketing, communications,
design, branding and technology services with Obtineo's leading search
engine marketing
* meet growing customer demand for one agency to provide services across
geographies
* create Europe's largest marketing and technology agency with strong
capabilities in US, Asia and MENA
* encompass knowledge sharing for the benefit of clients with over 1,800
people across 15 countries
* bring together a strong customer base of blue chip, global companies
* create a stronger appeal to attract and maintain the best talent
* provide a simplified listing structure, greater access to global capital
markets and international investors
* capitalise on the structural shift in spend from offline to online
channels
* strengthen financial position with ability to drive further industry
consolidation
* Investment of €50m to support further expansion in the US, Asia and MENA
* €40m committed by Obtineo through a private placement to Carlyle, Cyrte
and Janivo
* €10m to come from a fully underwritten rights issue expected in July,
2010
* The Boards of Directors of both companies are confident that material
revenue synergies and cost savings can be made
Transaction summary:
* Obtineo and LBi merge
* The exchange ratio has been set so that, post rights issue, the
shareholders in LBi will receive51% in the merged entity, former
shareholders in Bigmouthmedia will receive 25% in the merged entity and
investors participating in the €40 million private placement will
receive 24% of shares in the merged entity
* Each share in LBi will be exchanged for 1 share in Obtineo
* LBi has received irrevocable undertakings from shareholders
representing34,414,053 ordinary shares or 55,5% of LBi's share capital to
vote in favour of the merger plan and the shareholders of Obtineo have
undertaken irrevocably to vote in favour of the merger
* The completion of the merger is subject to standard conditions including
Extraordinary General Meetings for LBi's and Obtineo's respective
shareholders, both expected to be held in April, 2010
* LBi and Obtineo's Boards of Directors and Executive Management expect the
merger to be finalised by July, 2010
* The merged entity, which will trade under the name LBi, will be a Dutch NV
with a single listing at NYSE Euronext Amsterdam and is expected to be
listed on July, 2010
* Upon completion of the merger, the shares in LBi will no longer be listed on
NASDAQ OMX Stockholm
* Fred Mulder, LBi Chairman, will be Chairman of the Supervisory Board of the
merged entity, Luke Taylor, LBi CEO, will be CEO and Huub Wezenberg CFO will
be CFO of the merged entity
LBi's and Obtineo's Boards of Directors view the merger as beneficial for both
companies and their shareholders. Both Boards of Directors further believe that
the exchange ratio is fair. The Boards of Directors' recommendations are
supported by a fairness opinion by Erik Penser Bankaktiebolag.
Rights issue
The Boards of LBi and Obtineo have agreed that, following the merger of the two
entities, the combined business will launch a fully-underwritten rights issue at
€1.00 per share, which will be available exclusively to LBi shareholders. The
rights issue provides existing LBi shareholders the opportunity to invest in the
combined company at a discount to the combined equity value. The Boards of
Directors believe there are significant growth opportunities available to the
merged entity to drive value for all shareholders.
Commenting on the transaction, Luke Taylor, CEO of LBi said:
"This is a transformational deal in a growing market. Combining these businesses
will enable us to offer our clients digital marketing, consulting and technology
services wherever they operate, all under one roof. This combination also
solidifies our position as the European leader and enables us to strengthen our
reach in the US, Asia and MENA. We are now well placed to take advantage of the
irreversible spending shift to online channels."
Fred Mulder, Chairman of LBi, said:
"This combination serves to meet client demands for an agency that provides best
in class service and a wide scope and breadth of digital advertising services. I
believe the combined competencies and scale achieved by this transaction,
together with the funding to support further international expansion, provides a
unique and highly sought after service."
Nazo Moosa, Director at Carlyle, said:
"The Carlyle Group, Cyrte and Janivo enthusiastically support LBi's growth as
the sector continues to consolidate. This combination is unique in its
geographical footprint and extensive range of services, and we look forward to
working with Luke's team to further strengthen LBi's capabilities."
Frank Botman, CEO of Cyrte, said:
"This is an exciting deal in a consolidating sector. We have invested in the new
LBi because we are confident in the opportunities provided by the scope for
further expansion of this differentiated service in the US and Asia."
Invitation to phone conference
A webcast, at which the merger will be presented to analysts and media, will
take place today, on February 25, 2010 at 11:00am GMT / 12:00pm CET and can be
followed online onwww.lbi.com <http://www.lbi.com/>.
Stockholm, February 25, 2010Amsterdam, February 25, 2010
LBiObtineo
Board of DirectorsBoard of Directors
Enquiries:
LBi Chairman Fred Mulder +31 (0) 20 460 2986
CEO Luke Taylor +44 (0)
7976 619 022
Obtineo Communications Rosanna + 44 (0)
Manager, Europe Konarzewski 20 7894 1632
Brunswick Wendel Verbeek +44 (0) 207404 5959
Citigate First Claire Verhagen + 31 (0)20
Financial 575 40 18
Notes to Editors
The information contained in this press release is such that LBi is obligated to
publish in accordance with the Securities Exchange and Clearing Operations Act
and the Financial Instruments Trading Act. The information was submitted for
publication on February 25, 2010 at 07:30 CET].
Background on LBi
LBi is a global digital marketing and technology agency, blending insight,
creativity and expertise to solve business problems. The largest genuinely full
service agency of its kind in Europe, LBi provides the full range of digital
capabilities, including digital strategy, branded content, service design,
media, CRM, technology, managed hosting and support services.
The Company employs over 1,500 professionals located primarily in the major
European, American and Asian business centers; such as Amsterdam, Atlanta,
Berlin, Brussels, London, Milan, Mumbai, New York, Paris and Stockholm.
LBi is listed on Nasdaq OMX in Stockholm and NYSE Euronext in Amsterdam (symbol:
LBI).
Background on Obtineo
Obtineo is a combination of Bigmouthmedia, one of the world's leading digital
marketing agencies with 12 offices worldwide, and €40m of new capital committed
towards global expansion of the combined entity. Bigmouthmedia is responsible
for developing and managing integrated, highly effective SEO, PPC, Affiliate and
Display campaigns which drive increased sales and outstanding ROI for brands big
and small. The company was founded in 1997 and is one of the few digital
marketing agencies with a proven track record of setting up and sustaining
multilingual, multi-territory campaigns in 30 languages across the globe.
Preliminary pro forma financial information
The unaudited pro forma accounts presented below have been prepared to
illustrate the merged group's financial position and earnings after completion
of the merger. The pro forma income statement for 2009 has been prepared by
combining the actual income statements for the two groups for the nine months to
30 September 2009. Full year pro forma will follow in the merger prospectus.
The merger will be carried out in accordance with the purchase method and LBi
has been identified as the acquiring company, applying the reverse merger
principle. The reverse merger principle is applied because LBi's shareholders
will post merger have the majority in respect of ownership and board
composition.
In preparing consolidated accounts for the merged group, LBi will establish new
acquisition values for Obtineo's assets and liabilities. Adjustments for synergy
gains, cost-savings or costs in conjunction with the merger have not been
included.
The preliminary acquisition analysis is based on the following assumptions:
The assumed share price for LBi is € 1.46 based on the latest share price of LBi
as per February 23, 2010. Under these conditions the reverse merger principle
gives an acquisition price of € 107.6 million including estimated deferred
payment of € 6.7 million based on current share price. The equity in Obtineo is
€ 33.7 million including the funding of € 40 million. A preliminary valuation of
client relationships in Obtineo has resulted in a value of € 6.7 million and the
corresponding deferred tax liability is € 1.7 million. The remaining part €
68.9 million is allocated to goodwill.
The assumptions above result in the following pro forma adjustments:
The amortisation of the client relationship in the income statement amounts to €
1.3 million per year and the related deferred tax is € 0.3 million. In the pro
forma amortisation of the client relationship is € 1.0 million and the related
deferred tax is € 0.3 million. Amortisation of client relationship in the income
statement of Obtineo has been adjusted with € 0.9 million and tax € 0.3
million.
The merged company intends to report consolidated accounts for the merged group
as from that the merger is registered at the Swedish Companies Registration
Office which is expected to be in July 2010 at the earliest. The information
stated below, accordingly, does not necessarily reflect the result or the
financial position that LBi and Obtineo would have had in combination if they
had conducted their operations as a single unit over the same periods. Nor does
the information necessarily provide any indication of the merged group's future
earnings.
Pro forma income statements for the period January to September 2009
LBi Obtineo Adjustment Pro forma
Group
M EUR
Net Sales 102.9 22.5 125.4
Earnings before depreciation and 9.0 4.5 13.5
amortisation*
Depreciation & Amortisation -4.8 -1.0 -0.1 -5.9
Impairment tangibles -0.9 0.0 -0.9
Impairment intangibles -68.9 0.0 -68.9
Operating result -65.6 3.5 -0.1 -62.2
Financial items -1.0 -0.6 -1.6
Result after financial items -66.6 2.8 -0.1 -63.9
Income taxes -2.1 -0.9 0.0 -3.0
Net result for the period -68.7 1.9 -0.1 -66.9
*Note: Proforma EBITDA includes 2009 restructuring costs of EUR 4.1 million
related to LBi and EUR 0.5 million related to Obtineo, do not reflect revenue
and cost synergies
Conditions for the merger
The completion of the merger is subject to standard authority approvals and
approval by a majority of two thirds of LBi shareholders by both the votes cast
and the shares represented at the Extraordinary General Meeting. Obtineo will be
expected to file an approved prospectus in connection with the Euronext listing
and the EUR 10 million offering of transferable subscription rights to
shareholders of LBi.
Other Information
A lock-up period of 18 months has been agreed on with Carlyle, Cyrte and Janivo,
as shareholders of the merged entity.
The merged entity has a commitment to make a potential cash payment of up to a
maximum of €14 million to the current Shareholders of Bigmouthmedia, 18 months
post merger, in the event that the share price of the merged entity does not
trade above EUR 1.65. Full details will be set out in the Merger Prospectus.
Preliminary timetable
25 February, 2010 The merger is announced and made available to the companies'
shareholders
Early April, 2010 The merger prospectus is made public
April, 2010 Extraordinary General Meeting of LBi and Obtineo,
respectively
July, 2010 The Swedish Companies Registration Office registers the
merger
July, 2010 LBI International AB ceases trading and Obtineo Netherlands
Holding NV begins trading on Euronext Amsterdam under the
name LBi International NV
Organisation
The governance of the merged entity will be undertaken through a two-tier Board
structure consisting of a Supervisory Board who will be responsible for taking
key strategic decisions, and a Management Board whose responsibility will be for
the day-to-day operations of the business and implementation of the Board
strategy. Mr. Luke Taylor, current CEO of LBi, will be the new CEO of the
Management Board of the combined group and Mr. Huub Wezenberg, current CFO of
LBi, will be CFO of the combined group. Fred Mulder, LBi's current Chairman,
will be Chairman of the Supervisory Board. In addition to Mr Mulder, the
Supervisory Board will include Joost Tjaden, Nazo Moosa, George William Fink and
another independent member. Such proposal will be subject to the appropriate
involvement of the nomination committee.
Strategic Advisory Committee
In addition to the Supervisory and the Management Board, a Strategic Advisory
Committee will be formed to help inform the strategic direction of the company.
This Committee will be chaired by Frank Botman, CEO of Cyrte, and include
Michiel Mol and Steve Leach, founders of LBi and Bigmouthmedia respectively.
The head office of the combined entity, responsible for central administration
and financial functions, will be located in Amsterdam.
Information to shareholders and merger plan
The Boards of LBi and Obtineo have prepared a joint merger plan in accordance
with the Swedish Companies Act and the Dutch Civil Code. Copies of the merger
plan, including the auditors' report regarding the merger's appropriateness for
the companies and how the merger consideration has been determined, will be
available at the companies' offices ultimately on 26 February 2010, and can from
such time be obtained free-of-charge from LBi, Tel: +46-(0)8-41 00 10 00. These
will also be available on LBi's website:www.lbi.com <http://www.lbi.com/>.
An information document will be made available to the shareholders of LBi not
later than two weeks prior to the Extraordinary General Meeting of LBi, expected
to be held in April 2010. This document will be prepared jointly by the Boards
of Directors of LBi and Obtineo. The document is intended as a basis for
decision-making by the shareholders of LBi prior to the general meeting that
will resolve on approval of the merger plan.
Advisors
Jefferies International Limited* is acting as lead financial advisor and
coordinator to the transaction. UBS is acting as the sell side advisor. Danske
Markets Corporate Finance is acting as financial advisor to the Boards of
Directors of LBi regarding the merger. SNS Bank will advise the merged entity
regarding the listing on NYSE Euronext Amsterdam and the rights issue. The
Boards of Directors' recommendations have support by a fairness opinion from
Erik Penser Bankaktiebolag. Linklaters and Loyens & Loeff are acting as legal
advisor to the Board of Directors of LBi and Houthoff are acting as legal
advisors to Obtineo.
*Authorised and regulated in the United Kingdom by the Financial Services
Authority
IMPORTANT NOTICE:
The LBi shares have not been and will not be registered under the U.S.
Securities Act of 1933, as
amended (the "Securities Act") or under any of the relevant securities laws of
any state or other
jurisdiction of the United States. Neither the U.S. Securities and Exchange
Commission nor any U.S.
state securities commission has approved of the LBi shares or determined if this
document is accurate
or complete. Any representation to the contrary is a criminal offence in the
United States. The LBi
shares will be offered to holders resident in the United States only pursuant to
an exemption from the
registration requirements of the Securities Act. The LBi shares may not be
offered or sold in the United
States except pursuant to an exemption from the Securities Act or in a
transaction not subject to the
registration requirements of the Securities Act.
This merger is made for the securities of a foreign company. The merger is
subject to disclosure
requirements of a foreign country that are different from those of the United
States. Financial statements
included in the document, if any, have been prepared in accordance with foreign
accounting standards
that may not be comparable to the financial statements of United States
companies.
It may be difficult for you to enforce your rights and any claim you may have
arising under the federal
securities laws, since the issuer is located in a foreign country, and some or
all of its officers and
directors may be residents of a foreign country. You may not be able to sue a
foreign company or its
officers or directors in a foreign court for violations of the U.S. securities
laws. It may be difficult to
compel a foreign company and its affiliates to subject themselves to a U.S.
court's judgment.]
[HUG#1388383]
LBi to merge with Obtineo to create Europe's largest marketing and technology agency
| Source: LBI International AB
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