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B Riley Financial to acquire United Online

B Riley Financial, a provider of financial and business advisory services, has signed a definitive agreement and plan of merger to acquire United Online, a provider of consumer services and products over the Internet, for USD11.00 per share, or approximately USD170 million. 

The consideration represents approximately USD48 million in cash consideration from B Riley Financial after taking into account the projected United Online cash balance at closing. 

United Online's Communications segment features the Internet access brands, NetZero and Juno, which offer a range of high-quality, low-priced dial-up and DSL Internet access services. In 2015, United Online's Communications segment generated approximately USD90 million in revenue and USD29.1 million of adjusted EBITDA.  Additionally, United Online's Unallocated Corporate segment expenses resulted in an adjusted EBITDA loss in 2015 of USD14.7 million.

"The acquisition of United Online is consistent with our long-term strategy of expanding and diversifying our business through opportunistic acquisitions," says Bryant Riley, Chairman and CEO of B. Riley Financial. "We have spent the last few years strategically assembling professionals which have created a truly diversified financial services offering. With Great American's expertise in asset valuation and disposition services, B. Riley's investment banking, capital markets and restructuring expertise, combined with our wealth and asset management services, we have put ourselves in the unique position to capitalise on investment opportunities like United Online." 

"Given our longstanding history with and knowledge of United Online's business, we understand that United Online is in a mature market.  While factoring this in, we believe this acquisition presents our shareholders with a compelling risk-adjusted financial return that capitalises on United Online's predictable cash flow. United Online's long standing employee base has done a fantastic job of managing the business in a declining business environment to maximise cash flow. We look to continue to capitalise on their prudent management."

Riley says: "We are also providing guidance regarding Adjusted EBITDA of USD9 to USD13 million for the year-to-date period through July 2016.  As our investors have come to understand, our financial performance from quarter to quarter can vary significantly due to the episodic nature of some of our underlying businesses. Several transactions this year are expected to conclude in June or July which impact the timing of our recognition of such revenues. As such, we have taken the unusual approach to give guidance for a period that extends through July."    

As separately announced, B Riley Financial has launched today a USD20 million follow-on public offering of common stock, with significant participation expected by senior management and members of the board of directors. In addition, the Company anticipates entering into a senior secured credit facility, collateralised by the assets of United Online to fund a portion of the merger consideration. 

The merger is anticipated to close in the third quarter of 2016, pending satisfaction of customary closing conditions, including a favourable vote by stockholders of United Online.

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