LONDON: Entertainment One Limited (eOne) announced that Entertainment One UK Holdings Ltd, a wholly owned indirect subsidiary of the Company, has entered into a share purchase agreement to acquire 100% of the shares of Audio Network for an aggregate consideration of approximately £178 million, including cash and cash equivalents net of working capital items, interest, and other transaction adjustments, acquired at completion, of approximately £13 million.
UK-based Audio Network Limited (Audio Network) is one of the world’s largest independent creators and publishers of original high-quality music for use in film, television, advertising and digital media, with streamlined owned rights.
The consideration will be satisfied by the payment of approximately £169 million in cash and by the issue of eOne common shares to key management shareholders of Audio Network on completion, equating to approximately £9 million.
The acquisition enhances eOne’s presence in music, a rapidly growing sector, with attractive growth that is complementary to eOne’s music, film, television and family brands businesses.
Audio Network has an attractive financial profile, including revenue of £29 million (growing 13% versus prior year), reported EBITDA of £11 million (reported EBITDA margin of 35%) and £10 million profit before tax, for the twelve-month period ended 30 June 2018 with total gross assets of £18 million as of 30 June 2018.
The combined business is expected to create scale, synergies and revenue opportunities across eOne. Key management, including co-founder Andrew Sunnucks and CEO Robb Smith, will join the senior management team of eOne’s Music business, led by Chris Taylor, and continue to drive execution of Audio Network’s strategy and day-to-day operations
Enterprise value of £165 million on a cash-free and debt-free basis, represents a multiple of 15x Audio Network’s last 12 months’ reported EBITDA of £11 million as of 30 June 2018.
Aggregate consideration of £178 million comprised of approximately £165 million acquisition of Audio Network and £13 million acquisition of cash and cash equivalents net of working capital items, interest, and other transaction adjustments, acquired at completion which is expected on or before 18 April 2019.
Cash consideration will be partially financed by the proceeds of the placing announced by Company with the remainder expected to be financed by a debt financing and the issue of Common Shares in eOne to Key Management.[the_ad id=”31605″]