Integrating the world’s largest video search engine with a leading text search platform
The Boards of blinkx plc (AIM:BLNX), the world’s largest video search engine (“blinkx” or the “Company”) and Prime Visibility Media Group, Inc., a leading online performance advertising network and digital marketing agency (“PVMG”) are pleased to announce today that they have entered into a definitive stock purchase agreement (the “Purchase Agreement”) pursuant to which blinkx has acquired the entire issued and to be issued shares of common stock and the entire issued and to be issued shares of preferred stock of PVMG (the “PVMG Shares”) for an aggregate consideration of US$36 million (£22.4 million), to be satisfied in cash (the “Acquisition”).
The Acquisition consideration of US$36 million (£22.4 million) will be funded through blinkx’s existing cash balances and the proceeds from a proposed placing of new ordinary shares in the capital of the Company (the “Placing”) announced separately today. A separate announcement is being issued by the Company this morning which will contain details of the Placing.
In the event that the Placing does not complete for any reason, the Acquisition will be funded entirely from the Company’s existing cash balances.
Further details of the Acquisition are set out in the Appendix to this document, available at http://www.blinkx.com/article/acquisition-prime-visibility-media-group-inc-blinkx-plc~1667.
Transaction Highlights
PVMG’s network averages over 600 advertisers (measured over the 6 month period to 30 September 2011) and 350 publishers. Processing 1.5 billion queries, and generating 14 million ad interactions every day, PVMG has the reach and volume to meet the demands of metric-driven advertisers and enables publishers to monetise their traffic from multiple forms of advertising.
Following the Acquisition, blinkx expects to integrate PVMG’s platform with blinkx’s so as to enable the blinkx video search engine to respond to a portion of PVMG’s 1.5 billion daily queries with relevant video results. Where available these videos can be paired with rich media video ads that typically monetise at a higher rate.
In September 2011, the average effective cost per mille (eCPM) of PVMG’s sponsored text advertisements was approximately US$5.00, while blinkx’s standard untargeted sponsored video advertisements were priced at US$13.00. blinkx believes that the combined group will be able to realise some of the differential between these two rates to generate incremental revenue.
PVMG also operates a digital marketing agency which offers consulting services to assist customers in developing Internet marketing strategies to establish and enhance their digital presence, through Search Engine Optimisation (SEO), Search Engine Marketing (SEM), social media, email and mobile marketing services.
Following the Acquisition, blinkx expects that the agency business will provide useful insights into its brands’ Internet marketing strategies, which will enable blinkx to offer more compelling advertising solutions.
PVMG is led by a team of seasoned executives with deep and diverse expertise in the search, rich media, mobile and agency sectors of the digital marketing industry. blinkx expects to benefit from the strategic addition of PVMG’s senior leadership in key areas across its business. PVMG CEO, S. Brian Mukherjee, will be joining blinkx as EVP and GM for Search and Mobile.
PVMG’s consolidated audited financial statements for its financial year ending 31 December 2010 show gross assets of US$22.4 million, and gross revenues of US$29.9 million, and a net loss for the period of US$389,511.
The integration is expected to begin immediately, and by the end of the financial year ending 31 March 2013 the Acquisition is expected to have an annual revenue run-rate of between US$35 million and US$40 million.
Commenting on the Acquisition, Suranga Chandratillake, CEO of blinkx, said:
“Online video advertising continues to be the fastest growing format by a significant margin, and is forecast to reach $3.5 billion over the next three years. Brands continue to move an increasing amount of their TV advertising budgets to online video, but need to be able to reach an audience of equivalent size on the Web. We’re extremely excited about the Acquisition because the integration of our video search engine with PVMG’s text search platform will enable us to tap into a new audience of intent-driven consumers and deliver TV-style brand advertising to them, which gives us the opportunity to expand our customer reach and increase PVMG’s margins over time.”
Commenting on the Acquisition, S. Brian Mukherjee, CEO of Prime Visibility Media Group, said:
“As a close knit team with the shared sense of optimism to lead the next revolution of digital advertising, we are proud of our accomplishments at PVMG. We believe that the Acquisition puts us at the very heart of one of the most dynamic sectors of the digital advertising industry – online video. The combination of our powerful, proven high frequency transaction engine and audience reach with blinkx’s unrivalled video search technology and vast content index unlocks a tremendous opportunity for us to develop high value online video advertising solutions.”
blinkx Current Trading
Trading for the first half of the financial year ending 31 March 2012 has been strong. For the half year period to 30 September 2011, the Company expects to report revenues of approximately US$44.6 million, an increase of over 60% from the corresponding period ended 30 September 2010, and to report EBITDA for the half year of approximately US$5.7 million and an operating profit for the half year of approximately US$4.9 million , an increase of approximately 95% over the corresponding period ended 30 September 2010. For the half year period to 30 September 2011, blinkx expects to report cash and cash equivalents of approximately US$52.9 million. blinkx is pleased to report that the integration of Burst Media Corporation is proceeding very well. blinkx expects that the cost of restructuring will be approximately US$2.5 million; less than the market predicted US$4.5 million. The Company has also seen continued growth of the AdHoc advertising platform with new brands, including Kelloggs, Disney, Pimms and Nivea.
blinkx expects to announce its half year results on 11 November 2011.
PVMG Overview
Established in December 2007, and headquartered in New York, NY, Prime Visibility Media Group, Inc., is a digital marketing holding company with three operating units: Prime Visibility, LLC an award winning search marketing agency; AdOn Network, Inc., a long tail performance, cost-per-click advertising network; and Predic.tv, LLC, an early stage rich media advertising company, which intends to target premium online advertisers and publishers.
