In a bid to diversify its revenue sources, loyalty and engagement rewards provider My Rewards International (ASX: MRI) is set to acquire digital marketing agency Frankly.
Frankly is a Melbourne-based digital marketing agency, offering a range of services including lead generation, search engine marketing (SEM), web development, creative design and campaign reporting. Frankly has provided services to prestigious clients including the National Basketball League (NBL).
The transaction is consistent with the Company’s strategy of investing in technology and assets to drive growth of its loyalty rewards business. The agreement is subject to certain conditions, including approval by My Rewards shareholders of the shares to be issued as consideration under the Agreement. It is proposed that such approval be sought by an additional resolution to be considered at the Extraordinary General Meeting of the Company scheduled to be held on 26 May 2023, with further details to be issued in due course.
My Rewards’ Executive Chairman David Vinson said, “We are excited to incorporate the Frankly business into our existing operations as My Rewards continues to build a complete solution for businesses to attract, engage and retain employees and customers. Having an established in-house digital agency, supported by a well-disciplined team, enables My Rewards to efficiently increase the services offered to existing and prospective clients. This acquisition allows My Rewards to cultivate additional revenue streams and add to the profitability of the Company.”
My Rewards will pay $1.8 million in different tranches. It will pay $750,000 in cash in monthly installments over a period of six months, and $1.05 million in My Rewards shares to be issued at the lower of the five-day volume weighted average price on the day prior to the EGM (subject to a minimum share price of $0.018 per share) and $0.026 per share.
The business to be acquired under the Proposed Transaction has reported nominal increasing operating profits in CY 2023, and it is anticipated to continue to operate on a similar basis and be self-funding following the Proposed Transaction. Frankly’s URL will also be acquired as part of the agreement.
As per its Q3 FY23 report, the Company is expanding its Rewards and Loyalty business to business (B2B) programs by partnering with new clients during the quarter. The programs are set to generate over $180k in annualised, higher-margin membership revenue.
It has a three-pronged strategy in place for the coming months. It aims to grow its B2B membership, diversify the product mix for increased margin and take on complementary business acquisitions.
My Rewards is investigating ways to improve the profitability of Frankly following completion of the Proposed Transaction. There will be no change to MRI’s Board of Directors as a result of the Proposed Transaction.
Alinda is a Business Reporter for The Sentiment
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