Italian digital entertainment company Buongiorno has acquired iTouch, a South African mobile content company, for 141 million euros (R1.34 billion).
Buongiorno says it will pay 129 million euros (R1.2 billion) in cash and absorb iTouch's 12 million euro (R113.74 million) net debt. The rest of the payment will be made in-kind, through the issuing of 15.4 million Buongiorno shares, valued at about R34.02 per share, to iTouch shareholders.
The cash component of the payment will be funded by a 115 million euro (R1.089 billion) loan facility.
Founded in 1995, iTouch has over 500 million mobile users and offices in 13 countries. The company listed in 2000 on the London Stock Exchange, but delisted in June 2005 through an acquisition by Japanese firm For-side.com.
iTouch is now privately-owned, following a management buyout in February this year, with Oak Investment Partners holding a 40% shareholding, Goldman Sachs holding 20% and the management team holding the remaining 40%.
Meeting global challenges
iTouch would not provide any comment beyond a media statement. However, Buongiorno says its acquisition of iTouch is an important step in its strategy to build a global organisation.
iTouch founder and CEO Wayne Pitout says the mobile value-added services (VAS) market continues to offer major opportunities for development, and requires increasing size and global scale.
Given its global presence, diversified product portfolio and complementary channels, the combined entity will be in a strong position to benefit from the significant expected market growth in the mobile VAS market, says Mauro Del Rio, founder and chairman of Buongiorno.
The integrated company will have more than 1 100 staff, delivering services in over 40 countries, he says. The aim is to provide digital entertainment to over a billion people worldwide by 2012, Del Rio adds.
Buongiorno also expects to benefit from fixed-cost synergy and scale, achieving tangible margin improvements and a reduction in business risk due to a balanced multi-channel approach and improved geographic reach.
Once the transaction is completed, Pitout will join the Buongiorno board as executive director. He will also be in charge of Buongiorno's Middle East and Africa business. Oak Investment Partners will also designate a board representative.
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