Pennsylvania-based social network MeetMe Inc. (NASDAQ: MEET) agreed to acquire San Francisco-based Skout, a mobile network for meeting new people, for $28.5 million in cash and approximately 5.37 million common shares of MeetMe, implying an enterprise value of $54.6 million based on MeetMe’s closing stock price on June 24, 2016.
Skout was founded in 2007 by Christian Wiklund, CEO, and Niklas Lindstrom, CTO. Skout had previously raised $22 million in venture funding from Andreessen Horowitz, and an undisclosed amount of seed funding from angel investor Dinesh Moorjanim, currently an Executive-in-Residence and LP at Warburg Pincus.
Skout reportedly generated 2015 revenue of $23.8 million, and had 3.5 million mobile monthly active users (MAU) in May 2016, 42,000 new registered users added daily on average in 2016. Skout is expected to remain a separate brand and standalone mobile application following the closing and its headquarters will remain in San Francisco.
“We believe this combination provides a pathway to $100 million in revenue in 2018 with adjusted EBITDA margins approaching 45 percent,” said Geoff Cook, CEO of MeetMe. “What’s more,” Cook continued, “this announcement comes during a period of strong growth for MeetMe, with May mobile DAU of 1.24 million, up 8% versus the Q1 average, and May mobile MAU exceeding 5.0 million for the first time in a calendar month, and up 14% versus the Q1 average.”
David Clark, chief financial officer of MeetMe, added, “We expect the acquisition to close in October of this year and to be accretive to earnings and to generate additional free cash flow for MeetMe in the first twelve months following the closing and beyond.”
Canaccord Genuity is serving as financial advisor and Morgan, Lewis & Bockius LLP is serving as legal counsel to MeetMe.
MeetMe chairman John C. Abbott announced his resignation, effective immediately, to focus on his business interests in Mexico and Brazil. “I am thrilled to see Skout join the MeetMe portfolio,” he said.
MeetMe (formerly myYearbook) owns and operates a social network for meeting new people on the Web and on mobile platforms in the United States. The company operates MeetMe mobile applications and meetme.com, which provide users with access to a multilingual menu of resources that promote social interaction, information sharing, and other topics of interest.
It also offers online marketing capabilities, which enable marketers to display their advertisements in various formats and in various locations. The company was formerly known as Quepasa Corp., a Latin American social network which merged with myYearbook in 2011. The combined company changed its name to MeetMe Inc. in June 2012. The company was founded in 1997 and is headquartered in New Hope, Pennsylvania. MeetMe has a market capitalization of nearly $223 million.