THK has announced that it has obtained a new $17.5 million credit line from Wachovia Bank, which replaces a $7.5 million credit line from the same bank.
A significant portion of the new credit line was subsequently used to close on the acquisition of Morex Marketing Group. This is a $22 million deal. The company expects Morex to generate $5 million in pre-tax earnings in 2006.
As consideration for the acquisition, the Company paid to the members of Morex, an aggregate of $9,438,778 in cash and issued to them an aggregate of 5,785,632 shares of the Company’s common stock, valued at $2.18 per share.
sec.gov
Some background on Morex:
Morex generated approximately $3 million in pre-tax earnings in the twelve-month period ending June 30, 2005, and management expects Morex to grow to approximately $5 million in pre-tax earnings in the twelve-month period ending December 31, 2006. In the acquisition, the Company paid $9,437,778 in cash funded by a draw on its credit facility with Wachovia Bank, and issued 5,680,631 shares of THK common stock valued at $2.18 per share, of which 675,688 shares will be held in escrow pending an audit of Morex's results for the three and nine months ended September 30, 2005. The former owners of Morex may also receive earnout payments of up to an additional $28 million, half in cash and half in common stock of THK, depending on the level of pre-tax earnings generated by Morex during each of the calendar years ending December 31, 2006, 2007 and 2008, respectively. The maximum earnout can only be achieved if Morex generates at least $12.5 million in pretax earnings in any one of those calendar years.
Morex Co-Founders Lloyd Ecker and Robert Moore will continue to lead Morex as co-CEOs under multi-year employment agreements with Morex. Morex attracts expectant mothers and their families to its website, www.babytobee.com, by offering free samples of products and services that are targeted to that audience. Based upon their experience, the management of Morex estimates that approximately one-third of all expectant mothers who are on the Internet register for babytobee. To date, over four million pre- and post-natal moms and dads have registered to receive free trial products and services from babytobee.
Morex's clients are advertisers who seek a direct relationship with consumers who are having a child and are concurrently making product decisions that will likely result in long-term brand loyalties. In the United States, consumers currently spend billions of dollars each year on baby and juvenile products. Morex's clients market a variety of products ranging from bottles and diapers (a multi-billion dollar industry alone), genetic testing, baby cribs and furniture, car seats and strollers, and pharmaceuticals. Currently, only a small portion of the advertising dollars spent by baby and juvenile product companies are spent on the Internet.
Commenting on the strategy of the Morex business, Robert Moore, co-founder and co-CEO of Morex, stated, "It is well known by consumer products companies that certain consumer 'life stages' are critical when it comes to marketing products and services. These life stage events are when consumers are typically most receptive to relevant messaging or trying new products for the first time. Examples of these life stages include when a person moves, gets married, or has a child. We believe that becoming a mother or father is one of the most important life stages, and it is our objective to help our clients get targeted trials of new products and services into the hands of people going through this life stage."
Morex and THK believe that the Morex marketing platform and technology can be leveraged to create new programs that target other critical life-stage or lifestyle demographics. The companies intend to roll out additional on-line marketing programs to some of these other life-stage categories in the future, as well as create additional growth opportunities through synergy development with other THK companies.
Lloyd Ecker, co-founder and co-CEO of Morex, stated, "We are excited to become part of the Think Partnership family of companies at what we believe is the early part of the growth curve for THK. Over the past several months, we have had the opportunity to spend time and work with some of the other THK companies. We see synergy between our company and some of the others, such as customer acquisition programs from Primary Ads, and increased organic website traffic from MarketSmart Interactive's search engine optimization services. We also see significant intangible benefits stemming from the complimentary expertise, relationships and experience of the other Think Partnership companies. We welcomed the opportunity to take a significant portion of our consideration in THK common stock as we are bullish on our opportunity to drive stock appreciation not only for ourselves but for all THK stockholders."
Prior to the closing of the acquisition of Morex by the Company, Morex acquired the Catamount Group, one of the leading brokers of online lead generation data to the off-line direct marketing industry, offering services beyond the traditional direct marketing agency.
Tina MacNicholl, the CEO of Catamount, stated, "Catamount has a multi-channel model that allows it to leverage a variety of media for offline as well as online clients, including many nationally recognized companies. In addition to the opportunities that our merger with Morex and Babytobee offers, we are very excited to work with the other THK companies to create new revenue streams." Ms. MacNicholl will continue to operate Catamount as a division of Morex under a multi-year employment agreement with Morex, and will also serve as the chief operating officer of Morex.
Scott P. Mitchell, the Company's president, added, "Through the addition of Morex, THK has expanded its interactive advertising platform to include world-class direct marketing capabilities that, via their recent Catamount acquisition, spans beyond page-views or clicks and leverages the powerful value that the convergence between offline and online marketing so clearly offers. Morex has demonstrated an impressive track record of success in maximizing the value of online lead generation through building long-lasting relationships via online marketing, as well as more traditional direct marketing tactics, such as telemarketing and postal mail. These platforms and technologies that enable the effective combination of these tactics, thereby diversifying and extending the reach we offer our advertisers, is exactly the kind of innovation that is making Think Partnership the world's most comprehensive, service-valued, interactive advertising business."
biz.yahoo.com |
