Investors in Internet start-up Espotting Media are waiting to see if the deal that promised them five times their money will still go ahead. NASDAQ-listed Findwhat.com originally agreed to acquire the business for £97m, but following a review of the business has decided to renegotiate the deal, even suggesting it may be called off.
Beringea, formerly ProVen Private Equity, and Matrix Private Equity both looked set to reap the profits of the acquisition. See EVCJ September 2003, page 13. Beringea first invested around £3m in the online advertising service in December 2001 and in August the following year committed a further £2.15m. Matrix Private Equity also committed £0.5m in the first round and a small amount in the second round of funding.
Findwhat.com and Espotting are currently engaged in negotiations as a result of Findwhat.com’s post-signing examination of Espotting’s historical and projected financial performance. The parties are reserving their rights under the existing merger agreement and, depending on the outcome of the review of Espotting’s financial performance, may negotiate to modify the terms of the transaction.
A statement issued by FindWhat.com said: “Any successful renegotiation of the terms will include a reduction of the purchase consideration, along with other material changes to the existing merger agreement. It is possible that mutually agreeable terms will not be reached and that the merger may not be consummated.”