Melbourne IT has unveiled plans to acquire digital marketing agency WME Group, with the ASX-listed domain name registrar raising new capital to fund a $39 million deal.
As a provider of end-to-end digital marketing solutions including search engine optimisation (SEO), search engine advertising and web design, WME Group’s market-facing brands include WME, Nothing But Web and Results First.
Run by founder and managing director, Nick Bell, WME Group has evolved into one of Australia’s largest digital marketing agencies, now operating globally in seven countries with a turnover of $46 million.
Alongside scale and scope, the deal is designed to strengthen Melbourne IT’s managed marketing capabilities, positioning the business as a leader in online marketing solutions for small and medium sized businesses (SMB).
“The Melbourne IT of today is almost unrecognisable from the Melbourne IT of three years ago,” Melbourne IT CEO, Martin Mercer, said.
“This acquisition will build on the success we have experienced to date in providing managed marketing solutions for small businesses.”
Mercer said WME Group represents a “logical and strong strategic fit” with Melbourne IT, where managed marketing solutions are now the growth engine for the company’s SMB division.
“We expect this powerful combination will enable us to grow ARPU at faster rates through enhanced cross sell and customer retention, as well as boost critical capability in search engine optimisation solutions and advanced customer account management,” he added.
Mercer said the proposed acquisition will be funded from raising $30.7 million from the market, with the rest coming through debt of approximately $9 million.
The capital raising will see the company offer one share for every existing seven shares at an issue price of $2.10 for investors, opening on 8 May and closing on 18 May.
Locally, WME Group has offices in Melbourne and Auckland with key management such as Bell expected to remain with the business.
Specifically, the agency specialises in web design, SEO, social media and pay-per-click advertising, alongside digital reputation management.
“Australian small businesses are looking for a trusted partner to help them create an online presence, and then grow and thrive in this increasingly complex digital environment,” Melbourne IT managing director of SMB division, Emma Hunt, added.
“With the capability that WME Group provides, Melbourne IT is now unequivocally that trusted partner. The acquisition clearly aligns with MLB’s strategy of transitioning our SMB organisation into the leading digital solutions partner for small and medium businesses.”
The move for WME Group follows previous acquisitions in Melbourne IT’s Enterprise Services division, such as Outware Systems which completed in February 2017 for $57.84 million and, the acquisition of Infoready in March 2016 for $15.4 million.