Acquisition, Subscription and Board Update

1 October 2020

Digitalbox plc

("Digitalbox" or the "Company") 

Acquisition, Proposed Subscription

and

Board Update

Digitalbox plc (AIM: DBOX), the mobile-first digital media business, which owns Entertainment Daily and The Daily Mash, today announces the acquisition of the entire issued share capital of Tab Media Limited ("Tab Media") for a cash consideration of £750,000 (the "Acquisition").

In conjunction with the Acquisition, the Company announces a proposed direct subscription to raise £1.2 million, before expenses, through a subscription for 24,489,795 new ordinary shares in the Company at a subscription price of 4.9 pence per ordinary share by Downing Strategic Micro-Cap Investment Trust plc (the "Subscription"). The Subscription is conditional on shareholders' approval at a general meeting of the Company. The Acquisition is not conditional on the Subscription or on shareholders' approval.

Acquisition

Tab Media runs an online news website, The Tab, covering youth and student culture for UK university students. The Tab operates a national website, as well as 32 sub-sites individually focused on specific universities across the UK. Content is produced by a professional team for the national site with student journalists adding to this via their local sites. Founder Jack Rivlin will remain in place on a consultancy basis to ensure a smooth transition of the business to the Digitalbox platform and the editorial team will remain unchanged as the Company integrates the business to benefit from the Digitalbox model.

The Acquisition is expected to be marginally accretive to earnings per share as enlarged by the Subscription in the first full year and significantly accretive in the second full year following the Acquisition.

The cash consideration for Tab Media is £750,000 on a cash-free debt-free basis, subject to an adjustment for working capital. The Acquisition is being effected via Digitalbox Publishing Limited, a wholly owned member of the Company's group (the "Group") and will be funded from the Group's existing cash resources.

In the financial year ended 31 December 2019, Tab Media's unaudited management accounts reported revenue was approximately £1.2 million, with gross profit of £0.9 million and loss before tax of £0.4 million. Gross assets as at 31 December 2019 were £0.6 million.

Subscription

The Company proposes to issue 24,489,795 new ordinary shares (the "Subscription Shares") to Downing Strategic Micro-Cap Investment Trust plc (the "Subscriber"), at a price of 4.9 pence per share (the "Subscription Price"), raising gross proceeds of £1.2 million. The proceeds of the Subscription will be used to accelerate the Company's growth strategy through further acquisitions.

The Subscription Price represents a discount of 2.0% to the closing price of 5.0 pence on 30 September 2020. The Subscription Shares represent 26.7% of the Company's existing issued share capital at the date of this announcement and will represent 21.1% of the Company's enlarged issued share capital immediately following the issue of the Subscription Shares.

The Subscription is conditional, inter alia, upon the approval by Shareholders at a general meeting of the Company which is expected to be convened on or around 19 October 2020 (the "General Meeting"). The Company has received irrevocable undertakings from certain shareholders and Directors of the Company in respect of 33,208,692 ordinary shares representing approximately 36.2% of the existing issued share capital to vote in favour of the resolutions to be proposed at the General Meeting.

A circular (the "Circular") is expected to be posted today which will contain details regarding the Subscription and the notice convening the General Meeting of the Company at which the resolutions will be proposed for the Company's shareholders to approve, inter alia, resolutions authorising the Company to issue the Subscription Shares on a non pre-emptive basis. Copies of the Circular will be available on the Company's website www.digitalbox.com.

The Subscription Shares will be allotted and issued fully paid and will, on issue, rank pari passu with the existing ordinary shares. Application will be made to the London Stock Exchange for the Subscription Shares to be admitted to trading on AIM. Admission of the Subscription Shares to trading on AIM is expected to occur at 8.00 a.m. on or around 20 October 2020 ("Admission").

As part of the Subscription, the Company and the Subscriber have entered into a relationship agreement (the "Relationship Agreement"), which will be conditional on, and take effect from, Admission and remain in force for so long as the Subscriber, together with its affiliates, holds at least 10% of the voting rights in of the issued share capital of the Company.  Pursuant to the terms of the Relationship Agreement, the Company has agreed, inter alia, to grant the Subscriber the right to appoint an observer to any meetings of the board of directors. Further details of the Relationship Agreement will be set out in the Circular.

Board Update

Pursuant to the Subscription Agreement, Robin Miller, Chairman of the Company, has indicated his willingness to resign as Chairman and step down from the Board. Robin will remain in his role and oversee a smooth transition of his responsibilities until a successor is appointed.

The Company will immediately commence a search process for independent non-executive chairman candidates, and a further update in this regard will be made in due course.

James Carter, Chief Executive of Digitalbox said:

"The Tab is the UK's leading youth culture platform fuelled by students and a pro team of journalists who love being first with the most relevant stories. The Tab provides a really exciting addition to our portfolio. As well as providing insights into youth and student culture, it is an important training ground for journalists.

As achieved with The Daily Mash, our technology platform can help drive traffic and advertising revenue to support the site. Since we acquired The Daily Mash in 2019, we have grown traffic and revenue whilst allowing the editorial team to get on with what they do best, and we aim to do the same with the Tab.   We very much look forward to working with Editor-in-Chief, Grace Vielma and her team as we look to grow and enhance The Tab."

Jack Rivlin, Co-Founder and Chief Executive of Tab Media said:

"I'm thrilled The Tab is joining such an exciting and fast-growing company, which has proven it can combine influential brands, huge audiences and a profitable business model. We received a number of bids during this process, but Digitalbox stood out as a business with a fantastic track record, run by extremely trustworthy people.

This is an important moment for our staff and our huge network of student journalists, who are now part of a company destined to become a major force in the media industry. They will work alongside talented digital journalists at Entertainment Daily and the iconic Daily Mash, which we have admired for a long time."

ENDS

This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

About Digitalbox plc

Based in Bath, UK, Digitalbox is a 'pure-play' digital media business with the aim of profitable publishing at scale on mobile platforms.

Digitalbox operates two trading brands, "Entertainment Daily" and "The Daily Mash". Entertainment Daily produces and publishes online UK entertainment news covering TV, showbiz and celebrity news. The Daily Mash produces and publishes satirical news content.

Digitalbox generates revenue from the sale of advertising in and around the content it publishes. The Group's optimisation for mobile enables it to achieve revenues per session significantly ahead of market norms for publishers on mobile.