CentralNic Group to acquire Zeropark and Voluum businesses


CentralNic Group plc (LON:CNIC), the global internet platform that derives revenue from the worldwide sales of internet domain names and related services, has announced that it has entered into a conditional agreement to acquire as a going concern the Zeropark and Voluum businesses including all material trade and assets pertaining thereto (together being “Codewise”), from three Polish based entities. The total consideration for the acquisition of Codewise is USD 36 million, payable in cash upon completion.

Codewise is headquartered in Krakow, Poland, and provides services to domain name owners and website operators so that they can generate recurring income from the monetisation of traffic to their websites, as well as tools for online marketers to acquire traffic and customers, and to manage and optimise their online marketing activities.

This Acquisition will expand CentralNic’s monetisation segment following on from the acquisition of Team Internet in December 2019 and will both build market share in this segment and expand CentralNic’s monetisation suppliers and customers. It will also allow the company to provide sophisticated online marketing tools to its customers who procure domain names and other web services from CentralNic’s existing businesses.

The Acquisition is expected to be significantly earnings enhancing with immediate effect.

The Company also announces an accelerated bookbuild to raise approximately £30 million (c. USD 39m) of new equity to fund the Acquisition and associated costs. Further details of the proposed Placing are detailed in this announcement.

Zeropark and Voluum

Codewise is a monetisation and MarTech business offering digital solutions, including Zeropark (an Ad Exchange platform connecting domain investors and other traffic providers with online marketers) and Voluum (SaaS analytics, measurement, optimisation and media buying tool). In addition to the underlying Zeropark and Voluum platforms, CentralNic is taking on all Codewise staff and management, including the development team developing the platforms to serve an increasing number of monetisation and marketing customers.

Zeropark is an Ad Exchange platform offering real-time-bidding solutions, connecting marketers with domain investors and publishers via its marketplace. The platform provides monetisation revenues to its customers from thousands of diverse sources, as well as marketing solutions for SMBs and brands to acquire traffic and customers online. Zeropark operates a revenue model based on cost per 1k impressions (“CPM”) and cost per click (“CPC”) together with a commission-based model on sales in marketplace.

Voluum is a SaaS online marketing management suite for SMBs and brands, enabling online ad analytics, tracking, and media buying, using AI-powered optimisation. Voluum operates a revenue model based on a recurring yearly tiered subscription pricing for its Tracker product, together with a commission-based model on demand side platforms.

The Zeropark and Voluum businesses together serve over 6,000 customers across 190 countries.

In the 12 months to 30 June 2020, on an unaudited basis, Codewise generated revenue of USD 60.3 million and pro forma adjusted EBITDA of USD 7.4 million*.

Transaction rationale

The Acquisition is expected to further enhance the success story of CentralNic’s monetisation business, following the acquisition of Team Internet in December 2019. Team Internet grew its revenue by 38% from USD 35.0 million in H1 2019 to USD 48.5 million in H1 2020.

CentralNic will retain the management team of Codewise in order to enhance its talent pool, and is excited to welcome c. 140 staff including a highly qualified development team in the technology hub of Krakow.

Codewise is a leading competitor to CentralNic’s Team Internet business and the Acquisition substantially increases CentralNic’s market share in this attractive sector and considerably broadens its network of domain investor customers, monetisation partners and publishers. In addition, it augments the service offering of CentralNic’s Direct segment with marketing automation and customer engagement solutions.

The Acquisition is expected to be more than 20 per cent. earnings accretive for CentralNic.

The Board of CentralNic believes that the Acquisition has the potential to generate revenue synergies through cross selling with its other businesses and potential cost synergies across technology platforms, server bulk discounts and marketing efforts. Through its due diligence, the Board has to date identified approximately USD 1 million of synergies.

Transaction Structure

The total consideration for the Acquisition is USD 36 million (subject to customary working capital adjustments) on a cash free, debt free basis which represents 4.9x the adjusted unaudited EBITDA of USD 7.4 million for the 12-month period to 30 June 2020. The consideration will be paid in cash at completion.

The Company and the Buyer (a special purpose acquisition vehicle wholly-owned by the Company) has entered into an agreement to acquire the trade and assets of Zeropark and Voluum businesses from Codewise ZP Sp. z o.o. Sp.k., Codewise VL Sp. z o.o. Sp.k. and Codewise Sp. z o.o. SP.k and both the Company and the Buyer will benefit from customary warranties given in relation to the Zeropark and Voluum businesses (which includes tax matters), subject to certain limitations as to quantum. The Sellers have agreed to abide by non-compete covenants for a 3 year period post-completion of the Acquisition in order to protect the goodwill of the Zeropark and Voluum businesses and, in addition, the Company and the Buyer have the benefit of specific indemnities relating to key matters, such as any losses arising as a result of any of the warranties relating to the intellectual property of Zeropark and/or Voluum being found to have been breached. 

The Acquisition will complete when the Sellers effect final steps of a pre-completion restructuring of the Zeropark and Voluum businesses, a formal grant of a new lease to the Sellers and the Buyer procures finance to fund the Acquisition.  The Company expects that each Acquisition Requisite will be satisfied during the Interim Period. Any Acquisition Requisite may be waived by the Company and the Buyer provided that the prior consent of the Joint Bookrunners is obtained.

You might also enjoy reading  CentralNic analyst Zeus raise 2022 revenue forecast by 8% to $617m

During the period between this announcement and completion of the Acquisition, the Sellers have agreed to operate and manage the Zeropark and Voluum businesses in the ordinary course and are required to seek the Buyer’s prior consent before carrying our certain acts which may give rise to any liability for, or otherwise impact, the Zeropark and Voluum businesses.

A further announcement will be made by the Company upon completion of the Acquisition.

Financing of the Acquisition – Proposed Accelerated Bookbuild to raise gross proceeds of approximately £30 million

The Company announces a proposed placing of new Ordinary Shares with existing and new institutional investors, to raise gross proceeds of approximately £30 million to fund the Acquisition and associated costs.

The Placing is being conducted through an accelerated bookbuild process which will commence immediately following this announcement. The Placing is subject to the terms and conditions set out in the Appendix to this announcement (which forms part of this announcement, such announcement and its Appendix together being this “Announcement”).

Zeus Capital Limited and Stifel Nicolaus Europe Limited are acting as joint bookrunners in connection with the Placing in accordance with the terms and conditions set out in the Appendix.

The final number of Placing Shares to be issued pursuant to the Placing and the Placing Price will be agreed by the Joint Bookrunners and the Company at the close of the Bookbuild, and the results of the Placing will be announced as soon as practicable thereafter. The timing for the close of the Bookbuild and the allocation of Placing Shares shall be at the absolute discretion of the Joint Bookrunners, in consultation with the Company. The Company and the Joint Bookrunners reserve the right to issue and sell a greater or lesser number of shares through the Placing.

The Placing Shares, when issued, will be fully paid and will rank pari passu in all respects with each other and with the existing ordinary shares of the Company, including, without limitation, the right to receive all dividends and other distributions declared, made or paid after the date of issue.

Applications will be made to the London Stock Exchange for admission to and trading on AIM.

Settlement for the Placing Shares and Admission are expected to take place on or before 8.00 a.m. on 30 September 2020.

The Placing is conditional upon, the Acquisition being unconditional in all respects and Admission becoming effective. The Placing is also conditional upon the placing agreement between the Company and the Joint Bookrunners not being terminated in accordance with its terms.  The Appendix to this Announcement sets out further information relating to the terms and conditions of the Placing.

Potential Placees should note that the completion of the Placing is subject to the conditions in the Acquisition Agreement being satisfied or waived on or before 30 September 2020. At this point it is anticipated that all conditions in the Acquisition Agreement will have been satisfied or waived save for the formal transfer of legal title which is scheduled to happen at legal completion of the Acquisition, which is scheduled to take place on, or prior to, 31 October 2020.  The signed documents transferring legal title will be held in legal escrow from completion of the Placing.

This Announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014. In addition, market soundings (as defined in MAR) were taken in respect of the Placing with the result that certain persons became aware of inside information (as defined in MAR), as permitted by MAR. This inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of such inside information relating to the Company and its securities.

Dr. John Malatesta, CEO of Codewise, said: “This is an exciting day for our current and future joint customers as this acquisition is founded on natural technological and commercial synergies with CentralNic’s monetisation businesses such as Team Internet, logically enabling the further expansion of an industry primary online advertising integrated stack which seamlessly consolidates in one place, demand and supply management, tracking and optimization. The inherent business similarities between our companies will result in accelerated profitable growth to be reinvested in relentlessly elevated customer experiences and into the acquisition of additional cash-generative ventures, consistently building on CentralNic’s core growth strategy.”

Ben Crawford, CEO of CentralNic Group, said: “We are delighted that Zeropark and Voluum platforms and technology, expert staff and business relationships are becoming part of CentralNic, boosting not only our recurring revenues and profits, but also our market share and competitiveness. Added to our existing capabilities, the Acquisition makes us a clear global leader, combining two of the most technically advanced monetisation platforms in the domain name industry, and the formidable teams that built and ran them.”

Find more news, interviews, share price & company profile here for:
CentralNic Group Plc

Good news travels fast (but only if you make that happen). Share on:

Share on twitter
Share on linkedin
Share on facebook
Share on email
Share on reddit
Find more news, interviews, share price & company profile here for:
CentralNic Group Plc

AIM All Share Index