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(Alliance News) - Digitalbox PLC on Thursday said it has acquired Tab Media Ltd for GBP750,000 in cash and announced a GBP1.2 million subscription in conjunction with the buy.
The Bath-based digital media company, which owns Entertainment Daily and The Daily Mash, said the proposed subscription by Downing Strategic Micro-Cap Investment Trust PLC was priced at 4.9 pence per share for 24.5 million shares. This represents a 2.0% discount to its Wednesday closing price of 5.0p.
Shares in Digitalbox were up 10% on Thursday morning at 5.50p.
The subscription shares represent 27% of Digitalbox's existing share capital and will represent 21% of share capital once subscription shares are issued. It is conditional on shareholder approval, with proceeds to "be used to accelerate the company's growth strategy through further acquisitions".
As part of this, Downing Strategic Micro-Cap and Digitalbox have entered a relationship agreement that will remain in place while Downing Strategic Micro-Cap holds at least a 10% stake. Under the terms of this agreement, Digitalbox has granted Downing Strategic Micro-Cap the right to appoint an observer to any board meetings.
Digitalbox Chair Robin Miller has said he is willing to resign, pursuant to the subscription agreement, and step down from the board. He will remain in his role until a successor is appointed.
Tab Media runs online news website The Tab, which covers youth and student culture for university students in the UK. It operates a national website plus 32 sub-sites for specific UK universities.
The Tab Media acquisition is expected to be marginally accretive to Digitalbox's earnings per share, as enlarged by the subscription, in the first full year and significantly accretive in the second full year after the buy.
In 2019, Tab Media's revenue was around GBP1.2 million. It made a gross profit of GBP900,000 and a pretax loss of GBP400,000, while its gross assets on December 31 came to GBP600,000.
Digitalbox Chief Executive James Carter said: "The Tab is the UK's leading youth culture platform fuelled by students and a pro team of journalists who love being first with the most relevant stories. The Tab provides a really exciting addition to our portfolio. As well as providing insights into youth and student culture, it is an important training ground for journalists.
"As achieved with The Daily Mash, our technology platform can help drive traffic and advertising revenue to support the site. Since we acquired The Daily Mash in 2019, we have grown traffic and revenue whilst allowing the editorial team to get on with what they do best, and we aim to do the same with the Tab. We very much look forward to working with Editor-in-Chief Grace Vielma and her team as we look to grow and enhance The Tab."
By Anna Farley; annafarley@alliancenews.com
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