26th Sep 2005 07:03
Media Square PLC26 September 2005 Immediate Release 26 September 2005 Media Square plc ("Media Square" or "the Company") Proposed acquisition of the Marketing Services Group of Huntsworth plc ("Huntsworth") (the "Acquisition") and Directorate Change Media Square, the retail marketing services and marketing communications group,is pleased to announce the proposed acquisition of Huntsworth's MarketingServices Group ("MSG") for a cash consideration of £63 million. The Acquisitionwill see the creation of an enlarged business with circa £200 million ofturnover and around 1,700 employees. The Acquisition is of the marketing services, specialist advertising and brandmanagement business of Huntsworth which was predominately acquired by Huntsworthas part of its merger with Incepta Group plc. The aggregated financial resultsfor the year to 28 February 2005 for MSG show EBIT* of £10.6 million and netassets of £35 million (including intangible assets of £28 million). The Acquisition is conditional upon a number of matters, including the approvalof both Media Square and Huntsworth shareholders and on Media Square securingadequate funding to complete the Acquisition. The Acquisition is expected to befunded through a mix of new debt and equity capital and Media Square expects tomake a further announcement detailing the funding arrangements for theAcquisition during the early part of next month. Trading in Media Square's Ordinary Shares on AIM will be suspended withimmediate effect pending publication of an Admission document in relation to theAcquisition. Speaking about the Acquisition, Media Square's Chief Executive, Jeremy Middletonsaid: "This is a huge step forward for the Group in our strategy to develop apowerful marketing communications and marketing services business. Media Squarehas an excellent track record in making accretive acquisitions. The Company isnow well placed to make this Acquisition which has the potential to drivesignificant future earnings and sales growth". Impact of the Acquisition • Positions Media Square as the fifth largest quoted marketing communications and marketing services business based in the UK • Transforms Media Square from a group with sales of circa £60 million into an international business with turnover of circa £200 million • Broadens the range of Media Square's services to include specialist advertising and a significant position in on-line advertising and marketing • Strengthens Media Square's presence in the Retail Marketing Services and Marketing Communications sectors • Enlarges the geographic footprint with operations in seven countries spanning Europe, the Far East, Africa and America employing some 1,700 people • The Directors believe that Media Square and the companies in MSG share a complementary entrepreneurial approach to their individual business disciplines, which offers a better environment for MSG's employees to contribute significantly to the Enlarged Group going forward "The proposed acquisition of MSG is an exciting new chapter in the developmentof Media Square. By combining forces with MSG we are now more than trebling oursize and increasing our scope to deliver progressive shareholder value. SinceOctober 2002, Media Square has already grown ten-fold to become one of theleading forces in the UK in marketing services and marketing communications.Following the completion of the Acquisition we will become an internationalgroup whilst greatly expanding group resources and extending our serviceoffering to existing and new clients", added Jeremy Middleton. Current trading Media Square has enjoyed considerable growth and development in its businessduring the last two and a half years. It achieved its internal targets for thehalf year to 30 April 2005. Since the acquisition of Coutts Holdings plc last year, Media Square hasexperienced a change in seasonal trends and the balance of its profitability hasskewed markedly to the first and last quarters of the financial year. Thischange is principally due to the large value of retail marketing services work,the majority of which focused on pre-Christmas tactical displays and promotions.There are clearly material risks to profitability which are associated withperiods of such intense activity. Historically, MSG has had a consistent revenue stream. However, the uncertaintycaused by the merger between Huntsworth and Incepta Group plc has had a negativeeffect on trading at the start of its current financial year. Improvements intrading have been seen in recent months and, following due diligence, thedirectors of Media Square have concluded that internal forecasts for the currentyear are challenging, but achievable. The Directors of Media Square believe that the enlarged group will occupy aleading position in the UK and overseas marketing communications and marketingservices landscape. As the fifth largest UK-based quoted group of its type,Media Square will be well positioned to compete for rapid growth. Directorate change Separately, the Board of Media Square wishes to announce that its Chairman,Robert Essex, has left the Board and he is replaced, on an interim basis, byNigel Bacon. Nigel, Media Square's senior independent director, is a charteredaccountant and has served on the Board since spring 2004. Robert Essex continuesto be employed within the Group and retains a number of directorships withsubsidiaries of Media Square plc. "We look forward to welcoming a number of new directors to the board of MediaSquare during the coming weeks. The Board recognises that, as we build a groupof considerable scale and diversity within the marketing sector, we need to workhard to ensure that the senior management team is adequately resourced andequipped," Jeremy Middleton concluded. * EBIT represents earnings before interest, tax, exceptional items and headoffice costs. - ENDS - For further information, please contact: Media Square plcJeremy Middleton, Chief ExecutiveM: 07889 206 155 e-mail: [email protected] Burns, Finance DirectorM: 07775 854 516 e-mail: [email protected] Buchanan CommunicationsIsabel PoddaT: 0207 466 5000 e-mail: [email protected] MorseT: 0207 466 5000 e-mail: [email protected] Collins Stewart - NOMAD and Broker to Media SquareChris WellsT: 0207 523 8350 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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