Global Traffic Network UK has bought the Commercial Division of UBC Media for a cash consideration of £9 million, subject to certain conditions being met before the anticipated completion date of March 1st 2009.
The conditions include the transfer of UBC COO John Quinn, who GTN see as crucial to the future successful of the company, and Chief Executive of UBC Simon Cole signing a three year non-compete and non-solicitation restrictions agreement to stop Simon starting or joining a rival company.
Although GTN is a large supplier of custom traffic and news reports to radio stations in Australia and Canada, this deal will GTN their biggest audience so far.
The cash consideration of £9 million is plus a deferred consideration if certain earn out revenue milestones are met in each of the three calendar years from January 1 2009.
Under the earn out, UBC will be entitled to £1 million if the acquired business generates calendar year 2009 revenue of at least £11.0 million and will be entitled to a higher payment amount, up to a maximum of £5.5 million, based on a graduated schedule of 2009 revenue ranging from £11 million to £13.6 million. For 2010 and 2011, UBC will be entitled to receive 50 per cent of the amount by which revenue from the acquired business exceeds £12 million or £12.5 million, respectively.
The Commercial Division generated revenues of £11.53 million in the financial year to March 2008 and £4.64million in the first six months of this financial year. Since the end of the first half of this year, UBC has signed a 2 year deal with Global Radio to supply traffic and travel bulletins for the entire Global Radio group, increasing the size of the audience delivered to advertisers by the Commercial Division by 32 per cent.
William L. Yde III, Chairman, CEO and President of GTN commented: "We are extremely excited about the acquisition, as it will dramatically increase our presence in the United Kingdom, adding approximately 230 radio stations and over 700,000 radio advertising spots per year."
Simon Cole says: "The talented Commercial team at UBC has spent 13 years building up a market leading networking business in the U.K. and now it is time for that to be part of a bigger international operation. I'm hugely grateful to every member of the team for the contribution they have made to delivering value for UBC's shareholders and delighted to be working with them and Global Traffic Network to take the business to a new level."