Business News
KIT digital Announces Acquisition of Content Management System Provider Morpheum
Wednesday 03. September 2008 - Accretive Acquisition to Bolster Product Offering and Realize Immediate Revenue and Cost Synergies; Morpheum CEO to Join KIT digital in Dubai in Senior Management Role
KIT digital, Inc. (OTCBB: KITD), a global provider of IPTV enablement technology and video-centric interactive marketing solutions, announced today that it has completed a stock purchase agreement to acquire Melbourne, Australia-based Morpheum, one of Asia’s leading providers of web-based content management systems (“CMS”). Morpheum’s award-winning software, LanternCMS, will become a key part of KIT digital’s device-agnostic IPTV platform.
Morpheum generated approximately US$2.4 million in revenues and approximately US$100,000 in EBITDA in the trailing 12 months through June 30, 2008. Management estimates that, after the immediate realization of synergies, the acquisition will contribute in excess of US$1.0 million in revenues and US$300,000 in EBITDA to the Company’s overall results in the last 4 months of 2008.
Under the terms of the acquisition, KIT digital purchased 100% of Morpheum’s shares at a total price of AU$950,000 (approximately US$836,000), with 7.5% of the consideration held in escrow for 6 months to cover unforeseen contingencies. The acquisition has been approved by KIT digital’s board of directors, and due diligence has been completed. Closing is effective immediately.
Morpheum generates its revenue in the Australasia and Asia-Pacific regions, with particular strength in national, state and local government verticals. KIT digital has been focused on expanding its IPTV business with government clients globally, a development which should be accelerated by the Morpheum acquisition. Morpheum’s public and private sector client roster includes Australia’s Department of Veteran Affairs and National Water Commission, Vodafone, OXFAM, VicSuper, McKesson Asia-Pacific, NSW Health, Film Victoria and the City of Sydney (Australia). Morpheum’s business model is focused on recurring revenues from software licenses and ongoing maintenance and support fees.
KIT digital will fully integrate LanternCMS into its video asset management solution, KIT VX, augmenting the Company’s technology product offering to allow for broader web-based content management. The integration of LanternCMS into the KIT VX platform will also immediately reduce the Company’s operating costs by cutting out certain third-party software suppliers, and allowing the Company to deliver a complete, end-to-end digital media asset management solution to its clients.
Kaleil Isaza Tuzman, chairman and chief executive officer of KIT digital, said, “The acquisition and integration of Morpheum materially expands our client delivery capabilities while delivering an immediate cash flow contribution. As such, we remain on track for our stated corporate goal of breaking through to operating cash-flow positivity in Q4. Through revenue and cost synergies, we anticipate in the vicinity of US$0.8 million in additional EBITDA contribution from this acquisition over the next 12 months.”
Joining KIT digital in a senior management role in Dubai will be Matt Harris, founder and CEO of Morpheum. As head of content management solutions, Mr. Harris will oversee integration of the LanternCMS capability into the KIT VX platform and manage the roll-out of KIT digital’s new video-centric CMS vertical.
“Our view is that KIT digital is quickly becoming the consolidating actor that is needed in the international IPTV platform space,” commented Mr. Harris. “By merging with KIT, we expect to increase the types of products and services we deliver to our current client base and in turn provide new capabilities to KIT’s global roster of clients. Morpheum has had previous success in delivering strategic web solutions in the Asia-Pacific region, and we anticipate global reach for these solutions within the framework of KIT digital.”
“KIT digital is committed to providing end-to-end digital media enablement and marketing solutions utilizing IPTV technology,” explained Gavin Campion, president of KIT digital. “The integration of Morpheum’s Lantern CMS into the KIT VX Enterprise product suite should be quick and seamless, since KIT has previously utilized the LanternCMS solution in client deployments. We are thrilled that Matt, a veteran of the digital asset management space, will be joining us in Dubai to direct our go-to-market strategy with CMS resellers globally.”
Acquisition Benefits
Key strengths expected from the combination include:
— Creation of KIT VX as a complete CMS solution;
— Strengthened presence in Asia-Pacific region;
— Strengthened presence in government vertical;
— Immediate increase in revenue, profitability and cash flow;
— Cost savings in KIT VX deployments through elimination of current
outsourcing to CMS vendors;
— Veteran leadership addition to KIT digital management team.