5th Jul 2007 07:00
M&C Saatchi PLC05 July 2007 M&C Saatchi PLC5 July 2007 M&C SAATCHI PLC ("M&C Saatchi" or the "Company") M&C Saatchi to acquire Clear Ideas Limited ("Clear") M&C Saatchi plc is pleased to announce that it has agreed to acquire all of theissued shares in Clear for an initial consideration of £18.4 million. Clear was established in 2002, and has become a top 5 brand consultancy in thatshort time. Clear employs 80 people with offices in London, New York andAmsterdam and has 35 blue chip clients, with over 80% of their clients givingrepeat business. Its full service offering includes bespoke advice and trainingon brand strategy, new product development and qualitative research. Last yearClear delivered revenues of £12.7 million and operating profits of £3.0 million.At the end of May 2007 Clear had net assets of £ 2.5 million. The five founding directors, Melvin Jay, Alistair Moore, Jonathan Williams, DrSteven Melford and James Osmond will remain as directors of Clear. In additionDavid Kershaw and Jerry Wales have been appointed to the board of Clear. The consideration for the acquisition of Clear will comprise: •initial consideration of £18.4 million, which will be subject to a completion accounts / net asset adjustment, which is expected to be £1.8 million, of which £0.3 million will be deferred until September 2007 and £0.8 million will be deferred till June 2008. The initial consideration will be satisfied by the issue of 3.4 million shares in M&C Saatchi (30% of the initial consideration), with the remainder satisfied by a cash payment of £13.6 million. The cash element of the consideration will be largely funded by a new debt facility provided by RBS to a maximum of £13.0 million. •deferred consideration, of £2.5 million which is dependent upon the profits of Clear exceeding £3.0 million for the financial period commencing 1 April 2007 and ending 31 March 2008. This payment is expected to be made in June 2008, and will be satisfied by the issue of shares in M&C Saatchi to the value of 30% of the deferred consideration, with the remainder to be satisfied by cash; and •contingent consideration in the form of an earnout, which is dependent upon the profits of Clear in the financial years ending 31 December 2007, 2008, 2009 and 2010. These payments are expected to be made around 31 March 2009 and 31 March 2011, and will be satisfied by the issue of shares in M&C Saatchi to the value of 70% of the contingent consideration, with the remainder to be satisfied by the issue by M&C Saatchi of loan notes. 25% of the contingent consideration will be paid to employees of Clear via an EBT trust and will result in an IFRS 20 charge in 2009 and 2011. If Clear performs as expected the acquisition will contribute revenues of £6.0million and operating profits of £1.3 million in 2007. On this basis thetransaction will be earnings enhancing. The acquisition agreement includes warranties, indemnities and protections infavour of M&C Saatchi that are usual in a transaction of this nature. It isanticipated that the initial consideration shares will be admitted to trading onAIM on 11 July 2007. David Kershaw, Chief Executive of M&C Saatchi plc, said: "This deal is consistent with the Company's growth strategy of enhancing strongorganic growth with selective acquisitions in attractive growth territories andin higher growth / margin disciplines. Over 50% of our business will now comefrom activities outside of traditional advertising creation. We are delightedthat the Clear team will bring a new and important dimension to our alreadystrong offering in the marketing services arena." Melvin Jay, Director and one of the founders of Clear said: "I am pleased that this deal creates great opportunities for Clear, M&C Saatchiand both sets of clients. Both organisations passionately believe that greatthinking & creativity delivered with clarity and commercial pragmatism can trulyhelp clients to find the growth opportunities they need." For further information: M&C Saatchi plc 020 7543 4500David Kershaw, Chief Executive Melvin Jay 020 7353 4200Clear Ideas Ltd Numis Securities Ltd 020 7260 1000Charles Farquhar / Lee Aston Tulchan Communications 020 7353 4200Celia Gordon Shute Notes Clear has a team of over 70 experienced insight, innovation and strategyspecialists delivering work for some 35 blue chip clients. The business wasfounded in 2002 by Melvin Jay, Alistair Moore, Jonathan Williams, Dr StevenMelford and James Osmond and is based in Richmond. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
M&C Saatchi