The Australian media company, Village Roadshow Limited (ASX:VRL) announced today that one of its subsidiaries has acquired 80% of the UK-based Opia business.
Opia is a sales promotion consultancy business that creates brand sales campaigns for international consumer electronic brands. The privately-owned company will now become part of VRL’s Digital Division. This acquisition will be combined with VRL’s Edge Loyalty Systems Pty Ltd in order to achieve synergies.
Opia has its business operations in UK, Europe and USA. VRL commented that Opia’s UK-based business operates on a similar business model to Edge and stated that this acquisition will provide the opportunity to leverage the networks and expertise of both businesses. This acquisition is also expected to be earnings accretive and contribute positive cash-flow to VRL. Furthermore, synergies from the combined Edge-Opia businesses are expected to generate incremental revenue. This transaction will allow Edge to expand its operations in its existing and new markets, especially Asia.
VRL will pay GBP24 million for 80% interest in Opia, which is adjusted for surplus cash, with deferred consideration payable if future earnings targets are met. The acquisition is being funded from VRL’s existing cash and debt facilities. Opia’s EBITDA is expected to be approximately GBP 6 million per annum in the first full year of acquisition and VRL’s share of this will be 80%. The net profit after tax (NPAT) contribution from Opia for the same period is expected to be GBP 2.6 million (AUD $5.8 million).
In a joint statement VRL’s Co-Executive Chairmen and Co-CEOs, Mr. Robert Kirby and Mr. Graham Burke, commented on the merits of the acquisition: “We are delighted to announce this acquisition which provides Edge with significant growth opportunities and brings scale to this emerging VRL division. We are harnessing our proven expertise in this unique space and the plan is to grow this business so it will, along with theme parks, cinema exhibition, film production and distribution, be a significant business for the VRL group.”
VRL last traded at $6.88 as at 10:29 AM (AEDT) and is up 14% for the year.
Author: Imran Valibhoy
Dec 21, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.