20 Mar WELLCOM ACQUIRES U.S. CONTENT CREATION BUSINESS
Wellcom Group Limited (ASX: WLL) acquired The Lab LLC on the 7th March for approximately $7.2m (USD $6.5m). Founded in 2002, The Lab has annual revenues of approximately $14.5m (USD $13m) and supplies a wide range of digital, print and creative solutions to a top drawer client base that includes Victoria’s Secret, Dentsu McGarry Bowen and David & Goliath. The business is headquartered in New York with offices in Los Angeles, California and Columbus, Ohio. In commenting on the acquisition, Mr Wayne Sidwell, Executive Chairman of Wellcom, said.
The Lab is a strong fit with our existing business, given the similarity of our service offerings, and provides direct exposure to the large multinational brands headquartered in the United States, as we seek increased global penetration for our industry-leading software, Knowledgewell. We believe the U.S. market has the potential to provide Wellcom with significant future growth.
The acquisition will be fully funded out of cash reserves and after transaction costs is expected to be modestly EPS accretive in FY14, and strongly accretive thereafter. The purchase price equates to an EBITDA multiple of approximately 3.5 times, which is in line with Wellcom’s established investment criteria. ”This acquisition is in line with our previously outlined strategy to continue our geographical expansion. After careful consideration of the opportunities available, we believe that we have found in The Lab, a strong base from which to establish a meaningful presence in the U.S. market”, concluded Mr Sidwell.