LONDON (Alliance News) - Zoopla Property Group PLC Thursday diversified into the online price comparison market, saying it will buy Ulysses Enterprises Ltd, the operator of the uSwitch energy, telecoms and financial products comparison site for up to GBP190 million.
Zoopla, which currently operates one of the UK's main online property sites, said it will pay GBP160 million initially on a cash-free, debt free basis, and the a performance-based earn-out of up to GBP30 million.
"The acquisition of uSwitch is a significant step in ZPG's mission to be the most useful resource for consumers and the most effective marketing partner for professionals across the property space. The transaction brings together two of the UK's best-known digital consumer brands and fastest-growing technology businesses of the past few years," Zoopla said.
"The combined group will offer advertisers enhanced lead generation, more frequent user engagement and additional revenue opportunities from new products and data. uSwitch will continue to operate as a standalone brand and platform and the uSwitch management team will remain with the business including CEO Steve Weller. The acquisition is expected to complete by end of June 2015," it added.
Zoopla said the GBP160 million initial payment if 9.9 times uSwitch's adjusted earnings before interest, tax, depreciation and amortisation in 2014. It is funding the deal using existing cash resources, and by drawing down GBP125 million of a new five-year GBP150 million credit facility.
It said it will maintain its policy of paying out 35% to 45% of profit as a dividend when the deal completes. It expects the acquisition to "significantly" boost adjusted Ebitda and adjusted earnings per share in the first full year after it completes.
Zoopla also said it expects to report revenue of over GBP41 million and adjusted Ebitda of about GBP21 million for the six months to end-March, as strong growth in member numbers overseas offset a decline in agency members in the UK where it is facing new competition. Its average revenue per agent rose by 13% as its members bought more products and packages and as those members who spent less left.
The company will report its half year results on May 20.
Zoopla also said uSwitch has had a good start to the calendar year with a "robust" trading performance. "The energy vertical is performing particularly well as uSwitch has fulfilled a higher level of switches compared to last year and also increased its rate per sale," it said.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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