Pacific Star Network (PNW) has reached agreement to merge with Crocmedia.
The merger, which has been expected for some time, will take place via the acquisition of 100% of Crocmedia shares, in exchange for PNW shares. When the merger is completed, Crocmedia shareholders will own 47% of the merged company.
The Merger is based on a like-for-like valuation of PNW and Crocmedia and a PNW share price of $0.25 per share (being the undisturbed 30-day volume weighted average price at the time of negotiation of the term sheet for the transaction).
PNW delivered unaudited revenue of $22.7 million and normalised EBITDA of $3.5 million for the 12 months to 31 October 2017.
The Merger represents an implied trailing twelve month EBITDA multiple of 6.4 times and is expected to be approximately 54% Earnings per Share accretive on a pro forma basis.
PNW will also raise $10.0 million in cash from the placement of new shares at $0.25 per share, conditional on the merger completing.
Viburnum, a 19.5% PNW shareholder will cornerstone the share placement with an $8.25 million investment. PNW intends to allocate $1.75 million of the placement to other strategic investors plus Crocmedia shareholders and executives. Crocmedia shareholders and executives will receive 91.6 million new shares in PNW as consideration for the sale of Crocmedia. Some Crocmedia shareholders and executives will participate in the placement.
Post completion of the merger and placement, current Crocmedia shareholders and executives are expected to own approximately 47% of PNW. Shareholders will enter into a voluntary escrow agreement not to sell shares for at least 12 months, after the merger agreement is completed.
