Investors in Internet start-up Espotting Media are anticipating a substantial return on their investment following an amended agreement to merge with NASDAQ-listed FindWhat.com, a developer and provider of performance-based marketing and commerce enabling services for online businesses. Shareholders Beringea, formerly ProVen Private Equity, and Matrix Private Equity are hoping to reap the profits of the acquisition, which it is hoped will close by the summer.
The merger was originally announced last year when Findwhat.com agreed to acquire the business for £97m, a sum that would have returned investors almost five times their money – see EVCJ September 2003, page 13. The terms of transaction have now been amended and Espotting shareholders will receive 7 million shares of FindWhat.com common stock and approximately $20m in cash. The amount of cash Espotting stockholders will receive may vary based on Espotting’s net assets on the closing date. At FindWhat.com’s closing share price on 6 February, 2004 the transaction values Espotting at around £92m, slightly lower than the original deal value.
Beringea first invested around £3m in the online advertising service in December 2001 and in August the following year committed a further £2.15m. The group invested an additional £600,000 in September last year. Matrix Private Equity also committed £0.5m in the first round and a small amount in the second round of funding.