WFCA Integrated is reversing into advertising and marketing services company Ekay.
The combined group will be based outside of London and it hopes this will be a selling point for the business. Both companies are based in Kent and the group also has operations in the Channel Islands. It will be the largest agency based outside of London and believes it can build on that position. There will also be savings of head office and administration costs. Ekay will also have increased buying power.
Ekay is paying £8.5m in cash and shares for WFCA. It is raising £2.5m gross from a placing at 6p a share in order to finance part of the cash consideration. The enlarged group will have pro forma net assets of £8.9m.
Michael Richards of WFCA will become chief executive, while Ekay’s current boss and founder becomes managing director. Bob Morton is becoming chairman.
Ekay reported a return to profit at the interim stage. It made £254,000 profit on revenues 30% higher at £23.1m. Last year Ekay was hit by bad debt write-offs. WFCA reported profits of £1.29m on revenue of £24.6m in the 11 months to November 2007. The pro forma 2007 figures of the group show profits of £1.3m on revenues of £81.2m.
Ekay is currently worth £3.9m at 10p a share. A meeting will be held on 2 April to vote on the acquisition. A capital reduction will be undertaken so that Ekay can pay a dividend in the next financial year. At the current market price the company will be valued at £15.6m.
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