Book publisher and marketing services provider St Ives (SIV) is back on the acquisition trail, snapping up the majority of The App Business (TAB) in a deal worth up to £55 million.
St Ives is paying an initial £22.3 million for 82.2% of the mobile phone product developer with an option to buy the remaining stake for around £5 million. But the deal value will increase to £54.9 million if TAB hits certain profit targets over the two years to April 2018.
'This acquisition further strengthens St Ives' digital credentials, and, coupled with the recent acquisition of US based Solstice Mobile in 2015, significantly increases the group's mobile strategy and product development engineering capabilities,' says chief executive Matt Armitage alongside a trading update.
The deal is being funded in part by a £13.8 million equity raise at 215p a share, as well as existing cash resources and the issue of 3.2 million shares to TAB's owners.
TAB generated sales of £5.1 million and earnings before interest, tax, depreciation and amortisation of £1.5 million in 23 months to 30 April 2014.
Deal-making, and particularly expansion into marketing services, is a key part of St Ives' strategy to diversify from its profitable but ex-growth book publishing division.
Armitage has identified Strategic Marketing and Marketing Activation as areas for the business to expand.
St Ives' Strategic Marketing division includes a number of businesses including data-drive direct marketing, digital marketing and consumer insight and market research specialists. It made an underlying profit of £16.3 million in the 12 months to 31 July 2015.
Marketing Activation runs events and exhibitions, communications via point of sale devices and field marketing services. It generated a £10.9 million operating profit before exceptional items.
Shares in St Ives trade 3% higher at 223p.