RhythmOne to buy Canada's Perk for $42.5m

Video search company RhythmOne is to buy Toronto-listed Perk, a mobile-first rewards and engagement platform, for $42.5m in a bid to strengthen its scale and platform.

The AIM-listed company has agreed to buy Perk’s issued outstanding common and class A shares and certain employee options, in a deal expected to close in January 2017.

The total consideration of $42.5m will be paid in RhythmOne shares at 0.381p each, on the issue of 88.2m shares, raising the total number of outstanding shares to 494m.

The acquisition of Perk’s employee shares will be exchanged for 4.51 RhythmOne shares at 0.381p worth about CA$2.90.

Subhransu Brian Mukherjee, chief executive of RhythmOne, said: "The acquisition of Perk builds on our transformation toward core mobile, video and programmatic products that drove strong results in the first half of the 2017 financial year. RhythmMax, which is now in full commercial production, is the principal driver of RhythmOne's growth and provides significant operational gearing potential.

"Our goal now shifts to fortifying and scaling the platform, and Perk's products are perfectly aligned with this strategy - allowing us to programmatically enable the acquisition's premium inventory. Perk adds unique mobile supply at scale, as well as key strategic demand relationships that are complementary to ours."

Mukherjee said Perk is expected to materially advance the company's financial performance and help to scale a platform to drive industry-wide consolidation in the second coming of ad tech. The company looks to develop Perk's owned and operated apps and websites to build an efficient and effective platform for digital advertising and content distribution.

For the year ended December 31, 2015, Perk generated revenue of $49.3m and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $8.4m.

The acquisition is expected to upgrade to revenues in the 2017 financial year, and be accretive to RhythmOne in the first full year of ownership.

Shares in RhythmOne were up 3.2% to 38.70p at 0902 GMT.