Communisis PLC Regulatory News (CMS)

 23 December 2014

Communisis plc

("Communisis" or the "Group")

Acquisition of Life Marketing Consultancy Limited

Acquisition brings important new capabilities to the Group's Design segment and complementary services for its growing number of consumer goods clients

Leading provider of personalised customer communication services, Communisis plc (LSE: CMS), announces that it has entered into an unconditional agreement to acquire the entire share capital of Life Marketing Consultancy Limited ("Life" or "the Acquisition"). The Acquisition will complete on 5 January 2015.

About Life

Life is an award-winning, research and insight-led shopper marketing agency. Life's clients are leading consumer goods groups especially in the food, drinks, technology and pharmaceutical sectors. Life has 63 permanent employees and operates from offices in Birmingham and London. The principal vendors, David Poole and Ian Humphris will join the Group in senior executive roles.

Shopper marketing focuses distinctly on understanding and influencing consumer behaviour within the shopping environment whilst also taking account of retailer strategies and requirements. It is an important component of the marketing budgets of large consumer goods brands.

Strategic Rationale

Life is complementary to the Group's Design and Deploy segments adding to its capabilities in brand communication and deployment services. It will allow Communisis to extend the range of services offered to its growing number of consumer goods clients.

The Acquisition is aligned with the Group's' strategic initiatives to expand in higher margin business areas and to deliver more value to its existing leading-brand clients.

The Acquisition offers considerable scope for growth. It provides opportunities for revenue synergies both within the Group's existing client portfolio and through the cross-selling of other marketing services in social media, video, digital production and content marketing.

Life's Financial Performance and Terms of the Acquisition

Life's adjusted EBITDA (*on a normalised basis before non-recurring items) for the year ending 31 December 2014 is expected to be approximately £1.4m. For the financial year ended 31 December 2013, Life generated adjusted EBITDA* of £1m on turnover of £7.0m (£4.6m net of recharged third-party costs). Gross assets of Life at that date were £3.6m.

Communisis will acquire Life for an initial consideration of up to £14m ("the initial consideration") including its estimated free cash at completion of £0.7m. The initial consideration will be satisfied by the issue of a two-year, bank guaranteed promissory note of £9.3m, £0.7m in cash and the issue to the vendors of 7,988,015 new ordinary shares in Communisis. The new ordinary shares have a one-year restriction on sale.

Additional consideration of up to £9.3m ("the additional consideration") will be payable on the basis of Life's future performance including its average adjusted EBITDA* for the two financial years ending 31 December 2015 and 2016 and the contribution from defined synergies realised over Life's three financial years ending 31 December 2017. The additional consideration will be satisfied in cash of up to £7.3m and by the issue of new ordinary shares up to a value of £2.0m.

The maximum consideration payable is £23.3m.

Andy Blundell, Chief Executive, commented;

Life has an excellent reputation in shopper marketing. It brings new capability to Communisis, broadening our agency proposition and complementing the brand deployment services offered to our growing number of consumer goods clients. This acquisition will benefit our fastest growing and higher margin business segments."

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About Communisis

Communisis is a UK leading provider of personalised customer communication services that specialises in helping clients communicate with their customers more effectively and more profitably in fast-changing markets.

Communisis has a reputation for production excellence and innovation and is trusted by many leading, consumer-facing brands to design, produce and deploy multi-channel personalised customer communications accurately, securely, reliably and at scale.