Marketing Group PLC (ST:TMGR) has made its first acquisition under the new management team. Although relatively small (FY16 revenues of €1.5m), wildcard fits well with Ranieri Communications, adding to its PR, social and influencer network. wildcard communications brings in a good range of blue-chip clients and opportunities for cross selling. Our FY18e and FY19e earnings estimates are nudged ahead, having being increased by 10% following the Q3 results. Industry interest in TMG’s start-up blockchain-enabled global media agency, Truth, has been very strong. Having spent time sorting out the inherited group, it is clear management is looking for profitable growth, which should lead to an improving rating.
wildcard communications is being purchased for an initial consideration of €0.234m, in cash and as a working capital injection. There is a three-year earn-out at a maximum multiple of 7.0x PAT. The next payment is scheduled for Q119 and is based on a multiple of 3.0x FY18 PAT, less the €0.234m already paid and to be met half in cash, half in equity. It was founded in 2008 and its client roster includes BMW, Canon, EA Games and Bosch.