Acquisition

4 Dec 2006 07:02

Creston PLC04 December 2006 Date: 4 December 2006On behalf of: Creston plc ("Creston" or "the Group")Embargoed until: 0701hrs Creston plc acquires PAN Advertising for a maximum consideration of £18.8million Creston plc ("Creston" or the "Group"), the diversified marketing servicesgroup, is pleased to announce the acquisition of specialist healthcareadvertising and marketing communications agency PAN Advertising Limited and itssubsidiaries ("PAN"). The consideration consists of a closing payment of £10.1million, up to £0.3 million dependent on the net assets of PAN at completion andfurther deferred consideration of up to £8.4 million dependent on the financialperformance of PAN in the period to 31 March 2009. PAN, which is based in Richmond, is a full-service healthcare advertising andcommunications agency with expertise in core global and European branding,strategy development, brand planning and advertising and promotion. Theacquisition will strengthen Creston's healthcare practice with PAN's offeringcomplementing Red Door Communications (the Group's healthcare PR agency). PAN's current customers include Boehringer Ingelheim, Bristol-Myers Squibb,GlaxoSmithKline, Ipsen, Organon, Schering, Servier and Wyeth. PAN has grownsignificantly since its formation in 1992. For the year ended 31 December 2005,PAN had revenues of £3.6 million and profit before taxation of £0.11 million(after payment of non-recurring proprietorial bonuses of £0.7 million). Thegross assets of PAN at 31 December 2005 were £2.1 million. Under the terms ofthe acquisition, PAN will have minimum net assets on completion of £0.75million, which will include cash of £0.5million. The maximum consideration of up to £18.8 million is to be satisfied by: - a closing payment of £10.1 million consisting of £8.5 million in cash and theissue of 793,809 new ordinary shares. This closing payment is subject to aclaw-back (capped at £1.2 million) should PAN's profit before interest andtaxation for the year ended 31 December 2006 fall below £1.35 million; - up to a further £0.3 million dependent on the net assets of PAN at completion;and - a deferred consideration of up to £8.4 million dependent on the financialperformance of PAN in the period to 31 March 2009 to be satisfied by up to 70per cent. in new ordinary shares or Unsecured Loan Notes with the balance inUnsecured Loan Notes (the final split is at Creston's option). The initial cash consideration will be financed from Creston's existing bankingfacilities and cash resources. Application will be made to the UK ListingAuthority for 793,809 new ordinary shares of 10 pence each in the capital ofCreston ranking pari passu to be admitted to the Official List of the UK ListingAuthority and to trading on the London Stock Exchange's market for listedsecurities. Today, Don Elgie, Chief Executive of Creston plc, said: "I am delighted that PAN is joining the Creston Group. Healthcare is a vibrantand growing sector and PAN further strengthens our healthcare offering toclients." Ben Davies, Managing Director of PAN, commented: "Having taken PAN to its position as one of the leading healthcare agencies, Iam delighted to have found a partner in Creston who will enable us to reach thenext level in our strategic development. Creston is a young, dynamic andinnovative group of first class agencies that will undoubtedly provide access tosynergistic skills and new opportunities. Importantly, we will also be able toretain the unique style and culture that has made PAN the success it is." FOR FURTHER INFORMATION, PLEASE CONTACT: Creston plc 020 7930 9757Don Elgie, Chief ExecutiveBarrie Brien, COO/CFOwww.creston.com Redleaf Communications 020 7822 0200Emma Kane/Sanna Lehtinen/Susan Quigley NOTES TO EDITORS: • Publication quality photographs are available through Redleaf on the numbers shown above. About Creston Plc • Creston's strategy is to build a diversified international marketing services group through a combination of organic growth and selective acquisitions. The Board's aim is to identify synergistic benefits between currently independent marketing services companies offering premium services such as market research, direct marketing, advertising, public relations, research and digital; and to build a diversified Group that offers clients solutions to both existing and future marketing needs. • Creston's companies boast a range of blue-chip clients including the AA, AstraZeneca United Kingdom, BA, Bacardi-Martini, Bayer, BT, Burger King, Canon, COI Communications, Cow & Gate, Diageo, Ebay, General Motors, George Wimpey, GlaxoSmithKline, Halifax, Kimberly-Clark, Lloyds, Lloyds Black Horse, Morrisons, Nestle Rowntree, Nissan, Pfizer, Norwich Union, Roche Diagnostics, Scottish Courage, Tesco, Toshiba, T-Mobile, Tropicana, Unilever, Vodafone, Walkers and WHSmith. • Creston's share price is quoted in the Financial Times, The Daily Telegraph, The Times and the London Evening Standard. This information is provided by RNS The company news service from the London Stock Exchange