Future: U.S. Purch-Ase
Edison | Jul 18, 2018 04:59AM ET
Future PLC (LON:FUTR) is taking a major step towards realizing its US ambitions with the acquisition of Purch for $132.5m/£100.1m, fully funded by a rights issue of 3 new for 4 existing shares at 303p. The purchase fits neatly with Future’s existing media brands and tech-enabled culture and expands the US revenue base to around half of group (historic pro-forma). The purchase price represents 2.1x Purch’s CY17 revenues, 13.1x EBITDA, and management expects the transaction to be materially enhancing to earnings in its first full year, FY19. On the ex-rights price and indicative forecasts, the shares will be trading on an undeserved discount to peers.
US market with clear attractions
The scale of opportunity in the US market has made it an obvious target for Future, and the purchase of Newbay in April gave the group a further foothold and broader revenue base. This acquisition is a larger step up. Purch’s business is also more closely aligned with Future’s, with prominent brands in consumer technology and science and knowledge. It generates solely digital revenues, with no legacy print, and has similar review-type formats to Future’s media brands, with advertising and affiliate revenue streams. While there is inevitable duplication of some of the tech stack, Purch brings with it an in-house developed ad tech platform including RAMP, which optimizes digital advertising yields across platforms and clearly complements Future’s Bordeaux platform, which optimizes viewability.
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