Acquisition of Social Chain and Vendor Placing

RNS Number : 8038O

Brave Bison Group PLC

03 February 2023

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN (TOGETHER, THIS "ANNOUNCEMENT") IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.  PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (AS AMENDED) (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (AS AMENDED)).  UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

3 February 2023

Brave Bison Group plc

("Brave Bison" or the "Company")

Acquisition of Social Chain

 Trading Update

and

Vendor Placing to raise £4.75 million

Brave Bison Group plc (AIM: BBSN),   the social and digital media company, is pleased to announce that it has entered into a conditional binding agreement to acquire the entire issued share capital of Social Chain Limited ("Social Chain") (the "Acquisition"). The initial consideration for the Acquisition consists of a payment of £7.7 million (the "Initial Consideration").

Part of the Initial Consideration will be funded by way of an oversubscribed vendor placing (the "Vendor Placing" or the "Placing") to raise £4.75 million. The price of the Placing at 2.3 pence per new ordinary share (the "Placing Price") represents a discount of 3.4% to the volume weighted average price per ordinary share for the 60-day period ended 2 February 2023, being the latest practicable date prior to the date of this announcement.

Social Chain is one of the UK's leading social media and influencer marketing agencies. It was founded in 2014 by Dragon's Den entrepreneur Steven Bartlett and works with global brands such as Amazon, TikTok, KFC and Apple Beats to create social media advertising campaigns and perform influencer marketing services. Social Chain has a total headcount of 122 with offices in Manchester, New York and London.

The board of directors (the "Board") of Brave Bison anticipates that the Company will meet or exceed the current market expectations for the financial year ended 31 December 2022, in which revenue is expected to increase in excess of 30% year-on-year, and net cash is expected to be £6.2 million at year end.

Acquisition Highlights:

· On a pro-forma basis, the Acquisition is expected to increase Brave Bison's revenues from social media advertising seven-fold to £15 million, and the consolidated businesses (the "Enlarged Brave Bison") is expected to generate total revenues in excess of £40 million for the financial year ending 31 December 2023. The Acquisition is expected to be earnings accretive in the current financial year

· Brave Bison will remain well capitalised on completion, with expected unaudited net cash of approximately £4.8 million and undrawn credit facilities of £1.5 million

· Social Chain is expected to generate revenues of £13.8 million and an adjusted EBITDA loss of £0.1 million in the year ending 31 December 2022. Over the last five years, Social Chain has grown at a compound annual growth rate of 14%, approximately doubling revenues from £7.1 million in the financial year ended 31 December 2017

· Brave Bison Social & Influencer and Social Chain will merge, with Social Chain CEO Pete Metcalfe taking responsibility for the enlarged social media advertising practice

· The Enlarged Brave Bison will have significant scale in the social media advertising market, one of the fastest-growing sub-sectors of the digital advertising industry with forecast annual growth rates of up to 15%

· The Acquisition will bring access to new, global customers, including Amazon, TikTok, Arla, KFC and Apple Beats . On a combined basis for the Enlarged Brave Bison, no single customer will represent more than 8% of net revenue, and the top 10 customers will represent less than 50% of net revenue

· The Acquisition will bring access to the US market, the largest market for digital advertising in the world, through a foundational office in New York, as well a new hub in Manchester, a key city for digital talent

· Social Chain is a non-core division of The Social Chain AG (the "Vendor"), a German e-commerce corporate listed in the Prime Standard of the Frankfurt Stock Exchange

· Brave Bison will finance the Initial Consideration from the Company's existing cash resources and bank facilities, and through the Vendor Placing of 206,521,739 new ordinary shares (the "Placing Shares") at a price of 2.3 pence per Placing Share

· An additional contingent consideration of up to £9.5 million (the "Contingent Consideration") is payable over three years following completion of the Acquisition. The amount payable under the Contingent Consideration is calculated on stretch performance targets based on EBITDA . The Contingent Consideration (to the extent it becomes payable) is expected to be satisfied from the operating cashflows of Social Chain post-acquisition

Placing Highlights

· Vendor Placing to raise £4.75 million at the Placing Price. The Placing Shares will represent approximately 16.0% of the Company's enlarged share capital on Admission

· Oliver & Theo Green have subscribed for Placing Shares with an aggregate value of approximately £100,000, and will retain a shareholding of 19.1%

· The Acquisition is conditional, inter alia, upon admission of the Placing Shares to trading on AIM (" Admission ")

· Cenkos Securities plc ("Cenkos") is acting as nominated adviser, sole broker and sole bookrunner in connection with the Placing

Brave Bison Trading Update

Brave Bison released its unaudited interim results in September 2022, reporting revenues for the half year period of £14.7m (H1 2021: £7.3m), an increase of 102% year-on-year, and adjusted EBITDA of £1.6m (H1 2021: £0.5m), an increase of 189% year-on-year.

The Company also reported profit before tax of £1.0m (H1 2021: £0.2m) and net cash of £4.8m (H1 2021: £2.9m).

The Board anticipates that Brave Bison will meet or exceed the current market expectations for the year ending 31 December 2022. Revenue is expected to increase by more than 30% year-on-year, and net cash is expected to be £6.2 million at year end.

Oliver Green , Chairman of Brave Bison, commented:

"We've long admired Social Chain, which we believe is among the world's best regarded social media and influencer marketing brands, and we're excited by the highly relevant clients it brings into our business. Social Chain has huge potential for growth within Brave Bison, taking the momentum Pete and the team have built up using Steven Bartlett's platform. We're delighted to be taking this big step forward as we continue to build a media, marketing and technology company for the new era."

Theo Green , Chief Growth Officer of Brave Bison, commented:

"This strategic acquisition strengthens our position in the social media advertising space and gives Brave Bison a foundational office in the US. My brother and I are delighted to be participating in this placing, and we remain on the lookout for opportunities in the digital media, digital advertising and technology services ecosystems."

Further details of the Acquisition and the Placing are set out below.

For further information please contact:

Brave Bison Group plc  Oliver Green, Chairman Theo Green, Chief Growth Officer Phillipa Norridge, Chief Financial Officer	via Cenkos
Cenkos Securities plc (Nomad and Broker) Nicholas Wells / Charlie Combe / George Lawson (Corporate Finance)	[phone]
Powerscourt Group (Public Relations) Elly Williamson / Ollie Simmonds	[phone] [e-mail]

About Brave Bison

Brave Bison (AIM: BBSN) is a social and digital media company, headquartered in London with a globally distributed workforce across eight countries.

Brave Bison is unique in that it is both a digital media owner, as well as a digital media agency. The Company owns and operates its own channels, and the communities attached to them, as well as offering customers a suite of advertising and technology services to help reach digital audiences.

Brave Bison has two core lines of business. Firstly, the publishing of content on social media channels to generate advertising revenue. Brave Bison operates over 650 channels including PGA Tour and US Open on YouTube, Cooking Wild and DIY & Crafts on Facebook and Slick and VSatisfying on Snap Discover. The Brave Bison media network generates approximately 1 billion average monthly views.

The second line of business involves the provision digital advertising and technology services for global, blue-chip brands such as Panasonic, New Balance, Primark and Samsung. These customers are serviced through three divisions: Brave Bison Social & Influencer, a social media advertising practice, Brave Bison Commerce, a digital commerce practice, and Brave Bison Performance, a paid and organic digital media practice. 

The Acquisition

Overview of Social Chain

Social Chain is a social media advertising company with offices in Manchester, New York and London. Steven Bartlett, the Dragon's Den entrepreneur, founded the business in 2014, and it has grown into one of the UK's leading social media and influencer marketing agencies.

Social Chain has a total headcount of 122, and approximately 50% of the staff are under 27. This social native approach to digital advertising has attracted global clients including Amazon, TikTok, Arla, KFC and Apple Beats.

Social Chain operates Social Minds , a podcast dedicated to social media marketing. Recent guest speakers include the social media managers from Monzo, Ryanair and Innocent Drinks. The podcast generates approximately 14,000 downloads every month.

For the financial year ending 31 December 2022, Social Chain is expected to generate revenues of £13.8 million and an adjusted EBITDA loss of £0.1 million (unaudited). Over the last five years, Social Chain has grown at a compound annual growth rate of 14%, approximately doubling revenues of £7.1 million in the financial year ended 31 December 2017.

Social Chain is a subsidiary of The Social Chain AG, a listed German ecommerce corporate founded by Georg Kofler and Wanja Oberhof. Social Chain represents less than 10% of The Social Chain AG revenues, and as part of the transaction Brave Bison has acquired all applicable intellectual property associated with the Social Chain mark.

As part of the acquisition, members of the senior management team at Social Chain will become option holders in Brave Bison. Up to 15 million share options will be issued over the next three years depending on performance.

Sale and Purchase Agreement

On 3 February 2023 the Company entered into a binding sale and purchase agreement ("Acquisition Agreement") with the Vendor pursuant to which the Company has conditionally agreed to acquire the entire issued share capital of Social Chain Limited for an initial consideration of £7.7 million. The Initial Consideration is subject to a working capital adjustment to reflect a normalised working capital position of £1.0 million.

The Contingent Consideration of up to £9.5 million is payable over three years following completion of the Acquisition. In order for the maximum annual payment of approximately £3.2 million to become payable, Social Chain is required to achieve an annual EBITDA of more than £3.2 million, £4.0 million and £4.8 million, in Years 1, 2 and 3, respectively.

Completion of the Acquisition Agreement will take effect on Admission.

Details of the Placing and the Placing Agreement

Under the terms of a placing agreement entered into today, 3 February 2023, between Cenkos and the Company (the "Placing Agreement"), Cenkos has conditionally agreed to use its reasonable endeavours to procure subscribers for the Placing Shares to raise £4.75 million.

Cenkos has conditionally placed the Placing Shares with certain institutional and other investors at the Placing Price. The Placing is not being underwritten by Cenkos.

The Placing has raised proceeds of £4.75 million through the Placing of the Placing Shares at the Placing Price. The Placing Price represents a discount of 3.4% to the volume weighted average price per Ordinary Share for the 60-day period ended 2 February 2023, being the latest practicable date prior to the date of this announcement.

The Placing Shares will represent approximately 16.0% of the Company's enlarged issued ordinary share capital on Admission.

The Placing is conditional, inter alia, on:

· The Placing Agreement not having been terminated in accordance with its terms prior to Admission of the Placing Shares to trading on AIM;

· The Acquisition Agreement not having been terminated in accordance with its terms prior to Admission.

· Admission becoming effective by no later than 8.00 a.m. on 6 February 2023 or such later time and/or date as the Company and Cenkos may agree (being no later than 8.00 a.m. on 20 February 2023).

The Placing Agreement contains customary warranties given by the Company to Cenkos as to matters in relation to, inter alia, the accuracy of information in this Announcement and other matters relating to Brave Bison and its business. In addition, the Company has provided a customary indemnity to Cenkos in respect of liabilities arising out of or in connection with the Placing.

Cenkos is entitled to terminate the Placing Agreement in certain circumstances prior to Admission including where any of the warranties are found not to be true or accurate or were misleading in any respect, the failure of the Company to comply in any material respect with any of its obligations under the Placing Agreement, the occurrence of certain force majeure events or a material adverse change in the business of the Group or in financial or trading position or prospects of the Group or the Company .

Director Placing Participation

Oliver & Theo Green (22.34% shareholders of the Company), Gordon Brough (0.05%) and Matt Law (together, the "Directors") have all subscribed for Placing Shares at the Placing Price under the Placing, as set out below.

Shareholder	Number of existing Ordinary Shares	% of existing issued ordinary share capital	Number of Placing Shares subscribed for at the Placing Price	Number of Ordinary Shares held on Admission	% of enlarged issued ordinary share capital on Admission
Oliver & Theo Green*	241,468,473*	22.34%	4,347,800	245,816,273	19.09%
Matt Law	-	-	870,000	870,000	0.07%
Gordon Brough	587,371	0.05%	1,087,000	1,674,371	0.13%

* 240,416,059 Ordinary Shares are held by Greenspan Investments Limited and 1,052,414 are held by Oliver Green in his own name

For the reasons set out above, the participation by the Directors referred to above in the Placing is classified as a 'related party transaction' for the purposes of Rule 13 of the AIM Rules. Philippa Norridge, as the independent Director of the Placing, considers, having consulted with Cenkos (as the Company's nominated adviser), that the terms of the related party transaction are fair and reasonable insofar as the Company's shareholders are concerned.

Admission, Settlement, Dealings and Total Voting Rights

The Placing Shares will be issued credited as fully paid and will rank pari passu with the Company's existing Ordinary Shares. The Placing Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.

Application has been made for the Placing Shares to be admitted to trading on AIM and it is expected that settlement of the Placing Shares and Admission will occur at 8.00 a.m. on 6 February 2023.

Following Admission of the Placing Shares, the Company's issued ordinary share capital will comprise 1,287,337,739 Ordinary Shares, none of which are held in treasury. Therefore, following Admission of the Placing Shares, the total number of Ordinary Shares with voting rights in the Company will be 1,287,337,739, which may be used by the Company's shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

The allotment and issue of the Placing Shares will not exceed the Company's existing authorities and no shareholder approval is therefore required.

Expected Timetable of Principal Events

Announcement of the Acquisition and the Vendor Placing	7.00 a.m. on 3 February 2023
Admission, completion of the Acquisition and dealings in the Placing Shares expected to commence on AIM	8.00 a.m. on 6 February 2023
Where applicable, expected date for CREST accounts to be credited in respect of Placing Shares in uncertificated form	6 February 2023
Where applicable, expected date for dispatch of definitive share certificates for Placing Shares in the certificated form	Within 10 business days of Admission

Important notices

The distribution of this Announcement and any other documentation associated with the Placing into jurisdictions other than the United Kingdom may be restricted by law.  Persons into whose possession these documents come should inform themselves about and observe any such restrictions.  Any failure to comply with these restrictions may constitute a violation of the securities laws or regulations of any such jurisdiction.  In particular, such documents should not be distributed, forwarded to or transmitted, directly or indirectly, in whole or in part, in, into or from the United States, Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction where to do so may constitute a violation of the securities laws or regulations of any such jurisdiction (each a "Restricted Jurisdiction").

The Placing Shares have not been and will not be registered under the US Securities Act 1933 (as amended) (the "US Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within the United States except in reliance on an exemption from the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States.

There will be no public offer of the Placing Shares in the United States.  The Placing Shares are being offered and sold outside the US in reliance on Regulation S under the US Securities Act.  The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Placing Shares or the accuracy or adequacy of this Announcement.  Any representation to the contrary is a criminal offence in the US. In addition, offers, sales or transfers of the securities in or into the US for a period of time following completion of the Placing by a person (whether or not participating in the Placing) may violate the registration requirement of the Securities Act.

The Placing Shares have not been and will not be registered under the relevant laws of any state, province or territory of any Restricted Jurisdiction and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within any Restricted Jurisdiction except pursuant to an applicable exemption from registration requirements.  There will be no public offer of Placing in Australia, Canada, Japan, or the Republic of South Africa.

This Announcement is for information purposes only and does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in any jurisdiction and should not be relied upon in connection with any decision to subscribe for or acquire any of the Placing Shares (as the case may be).  In particular, this Announcement does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States.

This Announcement has been issued by, and is the sole responsibility of, the Company.  No person has been authorised to give any information or to make any representations other than those contained in this Announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company or Cenkos.  Subject to the AIM Rules for Companies, the issue of this Announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this Announcement or that the information contained in it is correct at any subsequent date.

Cenkos, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for the Company and no one else in connection with the Placing and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or any matters referred to in this Announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on Cenkos by the Financial Services and Markets Act 2000   or the regulatory regime established thereunder, Cenkos does not accept any responsibility whatsoever for the contents of this Announcement, and makes no representation or warranty, express or implied, for the contents of this Announcement, including its accuracy, completeness or verification, or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company or the Placing Shares or the Placing, and nothing in this Announcement is or shall be relied upon as, a promise or representation in this respect whether as to the past or future.  Cenkos accordingly disclaims to the fullest extent permitted by law all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this Announcement or any such statement.

No statement in this Announcement is intended to be a profit forecast or profit estimate for any period and no statement in this Announcement should be interpreted to mean that earnings or earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share of the Company.

This Announcement may include statements that are, or may be deemed to be, "forward-looking statements".  These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology.  These forward-looking statements include matters that are not historical facts.  They appear in a number of places throughout this Announcement and include statements regarding the Directors' current intentions, beliefs or expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the Company's markets.  By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances.  Actual results and developments could differ materially from those expressed or implied by the forward-looking statements.  Forward-looking statements may and often do differ materially from actual results.  Any forward-looking statements in this Announcement are based on certain factors and assumptions, including the Directors' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's operations, results of operations, growth strategy and liquidity.  Whilst the Directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect.  Save as required by applicable law or by the AIM Rules for Companies, the Company undertakes no obligation to release publicly the results of any revisions to any forward-looking statements in this Announcement that may occur due to any change in the Directors' expectations or to reflect events or circumstances after the date of this Announcement.

Information to Distributors

UK product governance

Solely for the purposes of the product governance requirements contained within of Chapter 3 of the FCA Handbook Production Intervention and Product Governance Sourcebook (the "UK Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the UK Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of investors who meet the criteria of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in paragraph 3 of the FCA Handbook Conduct of Business Sourcebook; and (ii) eligible for distribution through all distribution channels (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors (for the purposes of UK Product Governance Requirements) should note that: (a) the price of the Placing Shares may decline and investors could lose all or part of their investment; (b) the Placing Shares offer no guaranteed income and no capital protection; and (c) an investment in the Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom.  The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing.  Furthermore, it is noted that, notwithstanding the Target Market Assessment, Cenkos will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Chapter 9A or 10A respectively of the FCA Handbook Conduct of Business Sourcebook; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Placing Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the Placing Shares and determining appropriate distribution channels.

Neither the content of the Company's website nor any website accessible by hyperlinks to the Company's website is incorporated in, or forms part of, this Announcement.

Certain figures contained in this Announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this Announcement may not conform exactly with the total figure given.

All references to time in this Announcement are to London time, unless otherwise stated.

PDMR Notification Form

The notification below is made in accordance with the requirements of MAR.

1	Details of the person discharging managerial responsibilities/person closely associated (PCA)
a)	Name	a)  Oliver & Theo Green b)  Matt Law c)  Gordon Brough
2	Reason for the notification
a)	Position/status	a) Executive Chairman and Chief Growth Officer respectively b) Non-Executive Director c) Non-Executive Director
b)	Initial notification/Amendment	Initial notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Brave Bison Group plc
b)	LEI	213800BEII7EWIN8X308
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument Identification code	ordinary shares of 0.1p each   Identification code (ISIN) for Brave Bison Group plc ordinary shares:  GB00BF8HJ774
b)	Nature of the transaction	Participation in Placing
c)	Price(s) and volume(s)	Price - 2.3 pence  Volumes: a) 4,347,800  b) 870,000  c) 1,087,000
d)	Aggregated information	See 4c) above
e)	Date of the transaction	3 February 2023
f)	Place of the transaction	London Stock Exchange, AIM

 

END

 

 

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