Bath-based global media group Future this week made a £100m move into the US consumer market with the proposed takeover of part of a leading US digital media publisher.
In what will be its largest acquisition to date, Future plans to buy the B2C (business-to-consumer) arm of Purch. The deal will add popular US tech and science platforms such as Tom’s Guide, Tom’s Hardware, Space.com and Live Science to Future’s burgeoning portfolio.
Future said there was a “compelling strategic rationale” behind the move, including further deepening its presence in US market, where it owns a number of tech and hobby titles, by as creating a market leading position in consumer tech media publishing as well as increasing the scale of its knowledge and science audience.
It also said the takeover was expected to be materially earnings enhancing in its first full year and to deliver a return on invested capital within two years.
Future intends to fund the £100.1m ($132.5m) cost of the acquisition by issuing new shares worth £105.7m.
New York-based Purch has grown organically and through acquisition into a leading US consumer online technology media publisher, with both owned and operated sites and strategic partnerships where it acts as an advertising technology provider to a network of publishers.
Last year it generated revenue of $63.5m, up 8% on the previous year. Its adjusted earnings rose by 49% to $10.1m.
Its B2C titles provide 72.8m monthly online users with product review formats, real-time deals and pricing information, retailer recommendations, and community-driven ‘how-to’ content on purchasing decisions.
Future said its affiliate – or eCommerce – deals were “very similar” to its own as they are integrated with editorial content, creating a new merchandising platform for retailers and driving consumers to purchase.
Future added: “In parallel, Purch has developed what the directors believe to be industry-leading advertising technology, which allows it to generate best prices in real-time through trading exchanges.
“The implementation of Purch’s technology has also allowed it to extend its advertising marketplace model to third-party publishers looking to leverage the power of the technology platform to deliver higher advertising monetisation.
“The directors believe Purch’s strategy is closely aligned to Future’s where trusted brands help consumers make better buying decisions through driving review content across their portfolio of brands, while harnessing the opportunities of technology and data.”
Pre-tax profits for the half year to the end of March at Future, whose portfolio now includes titles ranging from Classic Rock, Metal Hammer and What Hi-Fi?, to global platforms such as Techradar, PCGamer.com and T3, more than doubled to £7m compared to the same period last year on revenues up 25% to £51.1m.
CEO Zillah Byng-Thorne, pictured, said: “The acquisition of Purch B2C significantly strengthens Future’s presence in the US market and further diversifies our revenue streams. The data-driven content model of Purch B2C is highly complementary to our existing capabilities and its advertising technology platform provides operational synergies and strong growth opportunities.
“This acquisition brings leading brands that will give us market leadership in the highly attractive consumer technology market, and notably strengthen our strong position in the knowledge and PC hardware verticals. In addition, we see a clear opportunity to combine the publishing services business of Purch B2C with Future’s digital franchise model.
“We have developed a strong track record in acquiring and integrating complementary businesses and this deal further accelerates our strategy for delivering growth both organically and through acquisition. We are confident that this acquisition will be materially earnings enhancing in the first full year and drive further growth in operating profitability and cash generation.”
Future’s shares fell by more than 9% following the announcement but have since regained some ground. At midday today they were trading at 483p against 532p on the morning of the Purch acquisition announcement.
