7th Aug 2007 07:00
YouGov PLC07 August 2007 7 August 2007 £27 MILLION PLACING AND ISSUE OF £10 MILLION SHARES TO SUPPORT SIGNIFICANT INTERNATIONAL EXPANSION * Three acquisitions expand YouGov's market research presence in US, Germany and the Nordic region * Complementary market research activities will strengthen YouGov's expertise in certain target sectors, expand YouGov's client base and accelerate organic growth * Acquisitions to be structured with a mixture of both cash and share consideration * £27 million institutional placing underwritten by Numis Securities Ltd. ("Placing") * YouGov trading in line with market expectations YouGov plc, the online market research agency, announced today that it proposesto raise approximately £27 million (£24.5million net of expenses) by means of aplacing for cash of 19,285,714 new ordinary shares of 0.2 pence each in thecapital of YouGov (the "Ordinary Shares") to institutional investors ("PlacingShares") at 140 pence per Ordinary Share (the "Placing Price"), which has beenfully underwritten by Numis Securities Ltd, and to issue Ordinary shares("Acquisition Shares") in connection with acquisitions and to grant options overthe Ordinary shares ("Option Shares") in connection with an acquisition to anaggregate value of £11.3 million in connection with the purchase of threecompanies (the "Acquisitions"). Each of the psychonomics and Zapera Acquisitionagreements contain earn-out provisions which, if met, will require YouGov to payan estimated amount of £6.5 million by way of further consideration. The acquisition of Polimetrix in the USA, in which YouGov already holds a 32%stake, of Zapera in the Nordic region and of psychonomics in Germany (announcedon 27 July) will: - provide YouGov with an enhanced global presence and establish key geographic hubs; - add expertise in certain YouGov target sectors in which the acquired businesses operate, being: brand research, financial services, FMCG, healthcare, insurance, political and social and organisational consulting; - result in an expanded client base; and - provide an enlarged platform from which to accelerate YouGov's organic expansion. Approximately £21.7 million of the proceeds of the Placing is to be used tosatisfy the cash consideration pursuant to the Acquisition agreements, with thebalance of the consideration under the Acquisition agreements being satisfied bythe issue of the Acquisition Shares to the relevant sellers and the grant ofoptions over the Option Shares having an aggregate value of approximately £11.3million (excluding amounts required to satisfy any additional considerationpayable pursuant to earn-out provisions). The Acquisition Shares are subject toselling restrictions for 12 months following completion. Commenting on the acquisitions Nadhim Zahawi, Chief Executive of YouGov said: "These three acquisitions expand our international presence considerably. Theacquisition of Polimetrix, who we already know well, cements YouGov's footholdin the key US market, the world's largest market research market. Theacquisitions of both psychonomics and Zapera strengthen our position in Europeand all three acquisitions expand our client base which we hope will allow us tointroduce products and market research services to a wider market. In additionwe believe that these acquisitions will provide YouGov with an enlarged globalpresence in key hubs in the USA and EMEA. "We're delighted that the vendors are taking up part of their consideration inYouGov shares and are also delighted that the management vendors will be workingwith us to deliver future growth. All three acquisitions enlarge our platform,from which we can accelerate organic growth." Polimetrix YouGov America Holdings LLC, a subsidiary of YouGov ("YouGov America"),currently owns 32% of Polimetrix, a pure online agency founded in 2004. Underthe terms of the agreement when YouGov America acquired its initial stake inDecember 2006, YouGov and YouGov America were granted the option to purchase theremaining share capital of Polimetrix at a price of $2.10 per share and it iseffectively this option that is being exercised by way of the merger betweenPolimetrix and a subsidiary of YouGov. Polimetrix, based in Palo Alto, California with an additional office inWashington DC, has an approach to online polling, with emphasis on political andacademic polling that the Directors believe is similar to YouGov's when it wasfounded. The company has a panel of approximately 1,000,000 people in the US andCanada and is active in the public affairs, university and government sectors.Clients include universities such as Harvard University and Yale University andvarious political pollsters. Since its creation in 2004, Polimetrix has achieved high growth in revenue,achieving revenue of £1.1 million in the year ended 31 December 2006. Thecompany recorded a loss before tax of £0.7 million in the same year. As at 31December 2006, the gross assets of Polimetrix totalled £4,212,000. The Directors believe that there is a strong cultural fit between Polimetrix andYouGov and intend to develop Polimetrix's operations to mirror those of YouGovfollowing the acquisition. Polimetrix has been working to expand its serviceofferings to include consulting, brand research and market research and YouGovis currently working with the Polimetrix management team to develop the businessinto a multi service agency. Under the terms of the pre-existing option, YouGov and YouGov America have theright to purchase the 68% of Polimetrix not currently owned by YouGov America.The merger will effectively result in the acquisition of such 68% at a price of$2.10 per share. The total consideration payable to Polimetrix is $24.1 million(approximately £11.7 million) of which $8.6 million (approximately £4.2 million)will be satisfied in cash. The remaining $15.5 million (approximately £7.5million) will be satisfied by the allotment of Ordinary Shares and by the grantof options over the Option Shares (to the value of approximately $2.7 million(£1.3 million) net of the aggregate exercise prices). A proportion of theAcquisition Shares will only be issued one year following completion andprovided there are no claims made by YouGov under the merger agreement. TheAcquisition Shares are subject to selling restrictions for a period of 12 monthsfrom the date of completion. Zapera Zapera is an online research agency with offices in Denmark, Finland, Sweden andNorway and specialises in healthcare, pharmaceutical and brand research. Thegroup, whose products include BrandMeter and ImageMeter, provides onlinequantitative and qualitative research. With a panel of over 125,000 people inthe Nordic/Baltic region, including specialist panels in various sectors such asthe medical sector, Zapera is able to undertake research in Sweden, Norway,Finland, Poland, Estonia and Russia. The company has a client base of regionalclients such as SAS and multinationals such as Kelloggs. Zapera has more than 68employees at five locations in the Nordic region. Zapera is a proven company which utilises online research and the Directorsbelieve that Zapera's online expertise and products can be leveraged to developand roll-out new innovations and products into YouGov's expansion plans. The Zapera Acquisition represents an opportunity for YouGov to expandinternationally into the Nordic/Baltic region and to enhance its operations byacquiring new products and entering new markets. The directors of YouGov andZapera believe that growth potential exists with the roll-out of YouGov'sBrandIndex and Omnibus products into the Nordic region using Zapera's existinginfrastructure and YouGov intend to continue Zapera's policy of geographicexpansion in Northern Europe through organic growth and acquisitions. In the year ended 31 December 2006, Zapera grew revenue by 51% to £3.6 millionand increased profit before tax to £420,000 from £188,000. As at 31 December2006, the gross assets of Zapera totalled £3,032,000. The consideration payable on completion is £5.3 million (subject to a networking capital adjustment) and is to be satisfied by a mixture of cash (£4.9million) and the allotment of 264,026 Acquisition Shares to the value of£400,000 (priced at 151.5 pence per Ordinary Share). In addition, YouGov willapply £2 million towards the repayment of loan capital, the acquisition of bankdebt and the payment of deferred consideration pursuant to a previousacquisition made by Zapera. Additional consideration of £2.25 million willbecome payable to the sellers subject to certain financial hurdles for the 12month period to 31 July 2008 being met by Zapera. Any such additionalconsideration shall be satisfied by the allotment of Ordinary Shares (priced atthe average closing mid-market price of trading over the 10 day period prior topayment) or, in the event that YouGov's shares no longer trade on AIM, in cash.Further, the two original founders are entitled to an earn-out payment of (inaggregate) £1.25 million depending on the financial performance for the 12 monthperiods to each of 31 July 2009 and 2010. Any such earn-out payment to thefounders will be satisfied 50% in cash and 50% in Ordinary Shares. The relevantAcquisition Shares are subject to selling restrictions for a period of 12 monthsfrom the date of completion. psychonomics The acquisition of psychonomics was announced on 27 July. psychonomics wasincorporated in 1992 and has its head office in Cologne with offices in Viennaand Berlin. The company is a multi service traditional research agency thatoffers market research and consultancy services across a range of sectors andwhich specialises in the insurance, financial services and healthcare sectors. psychonomics has a history of consistent growth in revenue and earnings and hasa client base of multinational corporations such as Allianz, Bayer, L'Oreal andSiemens. It is now placed in the top ten German market research agencies (basedon 2006 revenue). Germany is the third largest market research market in the world, after the USand the UK, and the acquisition of psychonomics will provide a hub for YouGov'scontinued expansion into mainland Europe. The Acquisition is an opportunity torollout the existing YouGov product base such as Omnibus and BrandIndex into theGerman market. The psychonomics management team has sector specialists concentrating on keysectors in which YouGov already operates and which it is trying to developfurther. The Directors believe that there will be synergies in the YouGov andpsychonomics businesses around data collection, in the transfer of existingonline market research activity to the YouGov platform and the migration oftraditional data collection to the online methodology. In the year ended 31 December 2006, psychonomics grew revenue by 32% to £9.1million (£6.9 million) and achieved a 60% increase in profits before tax of£740,000 (£461,000). As at 31 December 2006, the gross assets of psychonomicstotalled £4,712,000. The consideration payable on completion for the entire issued share capital ofpsychonomics is €20.75 million (approximately £14.0 million) and will besatisfied by the issue of Acquisition Shares to the value of €5 million(approximately £3.4 million) with the balance being paid in cash. Of the initialcash consideration €3.2 million (approximately £2.1 million) has been paid as anon-refundable deposit. The psychonomics sellers are entitled to be paid the precompletion profits of psychonomics for the current year calculated in proportionto the number of months elapsed prior to completion. Such amount is capped at€1.5 million (approximately £1 million.) An earn-out has also been put in placefor the two financial years ending 31 December 2008. Under this earn-out, basedon financial targets being met, a maximum of a further €3 million (approximately£2 million) will be payable, either in cash or Ordinary Shares (priced at theaverage price of trading over the 30 dealing day period following publication ofthe audited financial statements for the financial year ending 31 December2008). In addition to the purchase price payable, Ordinary Shares to the valueof €500,000 will be issued for a psychonomics employee incentivisationprogramme. The relevant Acquisition Shares are subject to selling restrictionsfor a period of 12 months from the date of completion. Acquisition Shares Valuation and Option Shares Valuation For the purposes of the values referred to in this announcement, the AcquisitionShares to be issued on completion of the Polimetrix and psychonomicsAcquisitions are valued at the Placing Price. For the purposes of calculatingthe number of Acquisition Shares to be issued on completion of thoseAcquisitions the price to be used is the average mid-market closing price overthe 30 day period ending on the dealing day prior to Extraordinary GeneralMeeting (the "EGM") referred to below. For the purposes of values referred to in this announcement, each share inPolimetrix which is under option is treated as having the same value, $2.10, asthe Polimetrix shares being acquired. In order to calculate the number of OptionShares which are to be subject to the replacement options in place of thePolimetrix shares under option, $2.10 is converted to sterling at exchange rate£2.06 to the £ and that value is divided by the Placing Price. For the purposesof calculating the number of Option Shares at completion, the price to be usedis the mid-market closing price over the 30 day period ending on the dealing dayprior to the EGM. YouGov Current trading All businesses continue to perform well with increased investment in people andinfrastructure. With trading in line with market expectations, the directors areconfident the 2007 financial year will be another successful year bothfinancially and operationally. A circular convening an EGM of the Company's shareholders will be dispatchedlater today and will be made available on the Company's website at http://www.yougov.com/corporate/investorReportsInv.asp?jID=1&sID=5&UID=. The EGM, atwhich resolutions to increase the Company's authorised share capital, to givethe directors authority to allot and issue shares in the company (including theAcquisition Shares and the Placing Shares) and to disapply statutory pre-emptionrights in relation to the allotment of the Placing Shares and the grant ofoptions over the Option Shares will be held on 3 September 2007. Applicationwill be made to the London Stock Exchange for the Placing Shares and theAcquisition Shares to be issued on completion of the Acquisitions to be admittedto trading on AIM ("Admission") and it is anticipated that Admission will occuron 6 September 2007. Ends Enquiries: YouGov plc Nadhim Zahawi 07803 293 019 Katherine Lee 020 7012 6000 Numis Jag Mundi 020 7260 1284 David Poutney 020 7260 1300 James Serjeant 020 7260 1309 Financial Dynamics Charlie Palmer / Nicola Biles 020 7831 3113 YouGov will be hosting an analyst presentation at the offices of FinancialDynamics: Holborn Gate, 26 Southampton Buildings, London WC2A 1PB at 10am thismorning. Note to Editors: Founded in May 2000 and listed on AIM in April 2005, YouGov is a market researchagency pioneering the use of the Internet and information technology to collecthigher-quality, in-depth data for market research and public consultation. TheCompany has a panel of 1,200,000 registered respondents. For the half year to 31January 2007, YouGov, which lifted UK client numbers 46 per cent to 263, grewpre-tax profits by 64% to £2.3 million on a turnover of £6.1 million. YouGov'sembryonic Middle Eastern arm was boosted by acquisition last year and grewrevenues by 53% in the first half of the financial year. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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