Auction Technology Group Regulatory News (ATG)

AUCTION TECHNOLOGY GROUP PLC

ACQUISITION OF ESTATESALES.NET

London, United Kingdom, 7 February 2023 - Auction Technology Group plc ("ATG", "the Company", "the Group") (LON: ATG), operator of world- leading marketplaces for curated online auctions, is pleased to announce the acquisition of Vintage Software LLC (the "Acquisition"), trading as estatesales.net ("ESN"), a leading US estate sales listing site.

Background

Based in Jackson, Missouri, ESN provides a platform to facilitate estate sales across the US. Both corporate estate sale companies as well as private customers use ESN to advertise online the sale of millions of unique second-hand items sourced from a range of events including private home estate sales and business liquidations.

Approximately 58% of revenue is derived from ESN's over four thousand monthly listing subscribers, with the remaining 42% from other fees, which predominantly includes traditional pay per listing fees. The website attracts over three million monthly site visitors, as well as over one million email subscribers, who are primarily buyers looking to discover unique items for sale at local estate sale events. Three quarters of all listings relate to in-person sales, with the remaining predominantly sold through third-party online auction sites. ESN also has a nascent marketplace capability with over 125,000 items sold in 2022 directly through the site. ESN was founded by the McQuade family and launched under its current name in 2002. Today, the company is run by Micky McQuade, and prior to the Acquisition was wholly owned by the McQuade family.

Rationale for the Acquisition

· The Acquisition expands ATG's immediately addressable market into the growing and fragmented US estate sales market, which had an estimated gross merchandise value of $5bn1 in 2022.

· Consistent with ATG's strategy, this represents a strong entry point into an attractive adjacent channel for the resale of second-hand items and is consistent with ATG's purpose to accelerate the growth of the circular economy.

· ESN is a market leader in an industry vertical at the start of its digital transformation. 

· ESN's seller and buyer bases are highly complementary and synergistic to ATG, providing the opportunity to drive more buyer traffic to ATG's marketplaces, convert browsers of ESN to online auctions and enable sellers to cross-list across multiple ATG marketplaces.

· The acquisition also provides the potential to leverage ATG's existing marketplace technology, experience and value-added services to customers of ESN and grow the online estate sales marketplace offering.

1. Management estimates January 2023

Financial consideration

The Acquisition purchase price is $40 million with an initial cash payment of $30 million plus deferred cash consideration of $10 million payable after twelve months. A total of up to $2 million employee retention bonus will also be payable after 12 months to certain employees of ESN. The acquisition will be funded from the Group's available cash balance and existing debt facilities.

For the year ended 31 December 2022, ESN unaudited revenue was $8.7 million, with an unaudited EBITDA of $4.7 million and unaudited gross assets of $1.3 million. Revenue has grown at a c.9% CAGR since 2019. The Board expects the acquisition to be accretive to the Group's adjusted earnings and adjusted EBITDA in the current financial year.

ATG also confirms its full year guidance provided at the FY 22 Results in December 2022, before the impact of today's announcement.

John-Paul Savant, Chief Executive Officer of Auction Technology Group plc, said:

"As a leading US estate sale listing site, estatesales.net is a natural fit for ATG as we unlock further areas of value within the secondary goods market and facilitate another part of the circular economy. We are excited by the multiple growth opportunities ahead, including enabling more sellers of unique and specialised secondary items to cross-list across multiple marketplaces and gain access to a larger pool of bidders and buyers, as well as the opportunity to develop ESN into the leading online estate sales platform in the US. We look forward to welcoming Micky and the estatesales.net team into ATG."

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About Auction Technology Group plc

Auction Technology Group plc ("ATG") is the operator of world leading marketplaces and auction services for curated online auctions, seamlessly connecting bidders from around the world to around 3,800 trusted auction houses across two major sectors: Industrial & Commercial ("I&C") and Art & Antiques ("A&A").

The Group powers seven online marketplaces using its proprietary auction platform technology, hosting in excess of 70,000 live and timed auctions each year. ATG has been supporting the auction industry since 1971 and the Company has offices in the UK, US and Germany. 

CAUTIONARY STATEMENT The announcement may contain forward-looking statements. These statements may relate to (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses or future prospects, and (ii) developments, expansion or business and management strategies of the Company. Forward-looking statements are identified by the use of such terms as "believe", "could", "should", "envisage", "anticipate", "aim", "estimate", "potential", "intend", "may", "plan", "will" or variations or similar expressions, or the negative thereof. Any forward-looking statements contained in this announcement are based on current expectations and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. If one or more of these risks or uncertainties materialise, or if underlying assumptions prove incorrect, the Company's actual results may vary materially from those expected, estimated or projected. No representation or warranty is made that any forward-looking statement will come to pass. Any forward-looking statements speak only as at the date of this announcement. The Company and its directors expressly disclaim any obligation or undertaking to publicly release any update or revisions to any forward-looking statements contained in this announcement to reflect any change in events, conditions or circumstances on which any such statements are based after the time they are made, other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority). Nothing in this announcement shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.

LEI Number: 213800U8Q9K2XI3WRE39