Taptica, a global end-to-end mobile advertising platform for advertising agencies and brands, is pleased to announce the acquisition of a majority shareholding in Adinnovation Inc. (ADI), a leader in Japan’s mobile advertising industry, for up to $ 5.7m. The Acquisition is being funded by Taptica’s own cash reserves.
Rationale for the Deal
Following the establishment of Taptica’s office in Seoul in 2016, and together with an already strong China-based presence, the acquisition forms part of Taptica’s stated strategy to increase its presence in the Asia-Pacific. The Taptica management anticipates that Japan will be the next key growth market for mobile advertising due to its developed mobile networks and large proliferation of smartphones.
The acquisition will accelerate Taptica’s brand awareness in Japan and facilitate its regional and global market expansion. The acquisition follows the two companies working together under a partnership agreement, which was announced earlier this year.
Taptica is focused on continued geographical expansion, establishing and growing its presence in ten hubs worldwide in the next three years (Russia, China, Germany, San Francisco, New York, Korea, Japan, India, South America and the UK).
Terms of the Transaction
In accordance with the terms of the binding agreement, Taptica has agreed to pay up to $ 5.7m for 57% of the issued share capital of ADI with approximately three-quarters payable immediately on closing and the remainder after 12 months, based on ADI meeting certain targets. In addition, the company has a call option to purchase the remaining 43% of the issued share capital of ADI for a price 8 times the net profit, for a period of six months commencing three years after closing. Thereafter, ADI has a put option for a period of three months to sell at a price of 7 times the net profit.
Following the closing of the acquisition, which is expected in August 2017, Taptica expects ADI to contribute more than $5m to the Company’s FY 2017 revenues and $0.5m to its adjusted EBITDA on a consolidated basis. A further announcement will be made in due course once the Acquisition has completed.