Perk, the reward engagement platform with offices in Waterloo, Austin, TX and Bangalore, India, announced Monday it will be acquired by RhythmOne PLC in an all-stock transaction valued at US$42.5 million.
“This is an excellent outcome for our shareholders and it’s an opportunity to drive long-term value into the future,” said Perk CEO Ted Hastings in a conference call Monday. “We believe this is the next step in the evolution of our business and one that allows us to significantly accelerate our business strategy.”
RhythmOne is a technology-enabled digital media company that connects online audiences with brands through content. Headquartered in San Francisco, the company reported revenue of US$166.7 million for the fiscal year ended March 31. It has more than 300 employees.
Perk, which was formed in December, 2009 and listed on the TSX in July of 2015, provides a platform rewarding mobile and internet activity. Members earn points through a variety of activities, including watching videos and playing social-media games. Perk reported third-quarter revenue of US$52.8 million for the nine months ended Sept. 30. Gross profit was US$23.2 million.
The deal will see each Perk share exchanged for 4.5116 RhythmOne shares. The value consideration received by Perk shareholders will be approximately CDN$2.90 per share, representing a premium of 11.5% to Perk’s close of CDN$2.60 on Dec. 2.
“For us, on behalf of the board, an attractive part of this was it was an all-stock transaction,” said Hastings. “We believe that right now on the TSX we’re not necessarily getting the valuation that we should, or the attention we should. We’ve suffered from a liquidity challenge.
“The fact that it is an all-stock transaction should give everyone confidence that the board and management believe very strongly in the go-forward synergies in these businesses.”
The boards of both companies have unanimously approved the deal, which remains subject to shareholder approval.
Perk has 170 employees. Hastings, the founder of Rebellion Media, joined Perk as CEO in December of 2014. He and Perk’s senior management team will join RhythmOne once the agreement is completed.
Hastings said the deal would provide scale, cost synergies and put Perk shareholders in a position to benefit from RhythmOne’s liquidity. The company has a debt-free balance sheet and US$69 million in cash as of Sept. 30.
“This transaction improves our overall scale of operations, advertiser reach, balance sheet and stock liquidity, while providing a material premium to Perk shareholders,” Hastings said.
