Mandalay Digital To Buy Appia

(RTTNews) - Mandalay Digital Group Inc (MNDL), a company that empowers operators and Original Equipment Manufacturers with end-to-end mobile solutions, Thursday agreed to buy Appia, an independent mobile user acquisition network.

Under the terms of the agreement, Mandalay Digital will issue at closing a number of shares and stock options to purchase its common stock equivalent to $100 million less Appia's net debt and transaction expenses (subject to working capital adjustments), at an agreed-upon value for Mandalay Digital common stock of $4.50 per common share.

Based on an estimate of Appia's net debt at closing, including transaction fees and expenses, Appia stockholders would receive in the aggregate approximately 19 million shares, representing pro forma ownership of the combined company of approximately 33%.

Mandalay Digital is acquiring Appia's equity for $65 million based on its closing stock price as of November 12 of $3.40. Mandalay Digital will assume approximately $10 million of Appia indebtedness, which Mandalay expects to refinance.

The transaction, which has been approved by the boards of directors of Mandalay Digital and Appia, is subject to Mandalay Digital stockholder and other customary approvals, and is expected to close in the first quarter of calendar 2015.

Mandalay Digital, which operates through its Digital Turbine subsidiary, intends to change its name to Digital Turbine during the month of January 2015 or at the transaction's close if earlier.

Appia had unaudited revenues of $30 million for the twelve months ended September 014. The combined company has the opportunity to achieve up to $14 million in revenue synergies during the fiscal year ending March 2016 and thereafter, predicated on Mandalay's achievement of its internal strategic standalone forecast.

Mandalay Digital has also identified approximately $2 million in potential annual cost synergies from overlapping campaign management and CPI-infrastructure functions, as well as duplicative corporate headcount. Mandalay Digital expects to achieve gross profit, EBITDA and cash flow growth from the realization of these revenue and cost synergies in fiscal 2016 and thereafter.