Acquisition of RLA Group provides specialist automotive, retail and media expertise plus expansion into Ireland.
Mission enjoys continued strong organic growth in line with Group expectations
19th December 2007
The Mission Marketing Group plc ("TMMG, themission®"), the AIM listed national marketing communications and advertising group, announced today that it has acquired RLA Group ("RLA"), a leading marketing and communications agency, with offices in Bournemouth, Belfast and Edinburgh, specialising in on-line and offline communications and media buying for national and international clients, particularly in the automotive and retail sectors.
themission® has acquired the entire issued share capital of RLA for an initial consideration of £9.5m consisting of initial cash/loan notes consideration of £7.7m and a further £1.8m satisfied by the issue of 1,408,503 new ordinary shares in themission® issued at 131.725 pence per share. A deferred initial consideration of up to £2m is payable based on achieving performance targets to 31 December 2007, £1.2m cash and £0.8m in shares. The combined initial and deferred initial consideration of £11.5m is payable if the annualised EBIT for the (period) exceeds £2.5m. This acquisition is expected to be immediately earnings enhancing on an annualised basis. A further potential payment of up to a maximum of £9.5m is due in March 2011, subject to RLA meeting challenging performance criteria based on its pre-tax profit performance over the approximately three year period from completion of the acquisition to 31 December 2010. This final payment is payable in cash or up to 50% in shares, at the Company's discretion. However under any scenario, the total consideration for RLA is capped at £20m plus an amount by which the acquired net assets at completion exceed £0.8m.
RLA was founded in 1984 and currently employs some 60 staff who will all join themission®. Following a recent period of development, RLA is now a full service marketing and communications group. It has built its reputation and success on working closely with major brands to help them communicate as powerfully and actively as possible through multiple media outlets at a national, regional and local level. This proposition is of particular value to clients with extended, national supply chain and distribution structures.
To deliver this, RLA offers a fully integrated model including strategic planning, creative and production management, detailed local and regional media planning and buying services, a unique digital delivery system, design and print for literature, Direct Marketing & POS, and ambient and guerilla marketing activity. These are provided through three office locations and a national field force and an experienced staff base made up of local, national and international marketing experts As a result of this specialist knowledge, RLA has a record of maintaining long and successful relationships with its clients which include Direct Wines, Goodyear Dunlop, Kingfisher plc, Mace, Teleflorist and a number of companies in the Volkswagen Group.
RLA audited accounts for the year ended 31 May 2007 recorded profit before interest, tax and amortisation (including certain non-recurring costs) of £1.7m on turnover of £12.8m, however the underlying EBIT after adjustments for non-recurring costs was £2.1m. As at 31 May 2007 RLA had audited total net assets of £4.1m.
The acquisition of RLA continues the successful development of themission® and its strategy of acquiring high quality, fast-growing, complementary businesses that enhance the Group's service offering and extend its geographical footprint.
With the support of themission® RLA will be well placed to expand its own service offering through collaboration with other Group agencies and the additional scale provided by themission® will help underpin RLA to continue its rapid growth. RLA will benefit from access to themission's London, Bristol, Scotland, Middlesex and Midlands locations and to new service capabilities. RLA's presence on the south coast, and in Belfast provides a potential base for other Group agencies with interests in these areas.
Iain Ferguson, Chief Executive of themission®, said: "Our organic growth and margin performance this year continues to be strong and in line with our expectations. RLA is another excellent addition to our Group and adds specialist expertise in specific industry sectors. Under its CEO Simon Dodd, it has developed rapidly over the last four years, growing turnover by 110% to become a well tuned, profitable agency with unique know-how and tools in multi-platform media planning and buying and a rapidly growing online business. Like our other agencies RLA has a passion for creative thinking and a determination to focus always on building its clients' business. RLA will work closely with our other agencies in expanding our presence in Ireland and in adding new scale to our Group's media operations where, along with property, the automotive sector is a major player."
Simon Dodd, CEO of RLA said:
"The RLA Group has come a long way in its history and is now positioned to fully maximize its niche in the market. We believe that themission is the perfect partner for us. Its appetite for rapid growth, combined with its stable of high quality companies throughout the UK, makes it the ideal place for RLA Group. We can't wait to apply our enthusiasm and skills to the group and to benefit from the opportunities it can provide."
The Company will make application for 1,408,503 new ordinary shares to be issued to be admitted to trading on AIM, and their admission to AIM is expected to take effect on 21 December 2007.
Following the admission of the 1,408,503 new ordinary shares, the total number of ordinary shares in issue, and therefore, the total number of voting rights will be 33,076,828.
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