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Exclusive Mobile and Video Supply, and Strategic Demand Relationships 
Will Fortify Core Programmatic Platform and Accelerate Financial Performance

London, England and San Francisco, California — 5 December 2016 — RhythmOne plc (“RhythmOne” or the “Company”, LSE AIM: RTHM) today announces that it has entered into a definitive agreement (the “Agreement”) with Perk Inc. (“Perk”, TSE: PER), the mobile-first supply side rewards and engagement platform, whereby RhythmOne has agreed to acquire all of Perk’s issued and outstanding Common and Class A Restricted voting shares and certain employee options (the “Perk Shares”) in exchange for total consideration of approximately US$42.5M in an all stock transaction that is expected to close in January 2017 (the “Acquisition”).

The acquisition of Perk accelerates the Company’s strategy to build a unified programmatic platform with unique audiences of uniform quality at scale.  Through Perk, RhythmOne gains access to a number of premium consumer mobile apps and web properties, adding exclusive inventory to the Company’s supply side portfolio, as well as strategic demand relationships. For the year ended December 31, 2015, Perk generated revenues of US$49.3M and adjusted* EBITDA of US$8.4M. The Acquisition is expected to result in an upgrade to FY2017 revenues, and be accretive to RhythmOne in the first full year of ownership.

About Perk

Listed on the Toronto Stock Exchange, Perk is a mobile-first rewards and engagement platform that matches the interests of consumers with those of brand and performance advertisers. Perk’s portfolio consists of 15 premium owned-and-operated apps, which deliver unique targeting opportunities for advertisers at the precise moment of consumer engagement and interaction, delivering insights and actionable results, both on- and off-line. Through Perk’s Rewarded Engagement Platform, users are rewarded for their app usage through points, digital goods, and coupons. This enables brands to form deep connections with consumers to achieve greater engagement, loyalty and conversion. Perk’s insights and intelligence solution, Perk IQ™, allows brands to measure performance and uncover valuable data around advertising attribution, brand impact, and purchase behavior.  

Perk also operates a series of category-specific websites, maintaining strategic demand and supply relationships with a number of leading, always-on partners that include Yahoo! and Facebook. Currently, approximately 98% of Perk’s supply, which is predominantly US-based, consists of mobile in-app or Web inventory, while the majority of its revenue is generated from high-impact, engaging brand or performance ads.

Acquisition Rationale

With RhythmOne’s Core programmatic platform, RhythmMax now fully established, the Acquisition will accelerate the Company’s strategy to further strengthen and scale the platform through unique audiences on the supply side, and always-on relationships on the demand side.

The Acquisition satisfies these objectives in a  number of ways. On the supply side, owning and operating a sizeable, highly engaged and verifiable audience provides a powerful value proposition to attract new and repeat demand partners to the Company’s platform, helping drive higher fill rates and cost-per-mille (CPM) pricing. Perk’s suite of premium, owned-and-operated mobile apps and websites brings a committed, growing user base that will become exclusive to RhythmOne. This premium owned-and-operated supply will enable the Company to continuously build, test and scale its quality assurance algorithms, and tap both growing performance advertising budgets and mobile video demand – the fastest growing segment in online advertising today.

On the demand side, Perk has long standing strategic relationships with key always-on network demand partners, such as Yahoo! and Facebook, among others. While Perk’s access to direct and programmatic demand is still nascent, it represents a captive growth opportunity for the combined enterprise to provide revenue synergies post-Acquisition. Through Perk, RhythmOne expects to add valuable always-on demand to its unified platform, while potentially improving yield for Perk inventory – either through direct programmatic connections with preferred demand sources or through guaranteed buying pools, or private marketplaces.

Importantly, the Acquisition also brings a close-knit and tenured executive team with a long track record of success in building, managing and profitably scaling consumer properties.  This expertise will directly complement RhythmOne’s expertise in building and managing an Ad Tech business, while also providing the infrastructure and executive bench strength to help drive growth, both organically and via acquisitions.

Financial Overview

For the year ended December 31, 2015, Perk generated revenues of US$49.3M, Net loss of US$17.1M and adjusted* EBITDA of US$8.4M that excludes certain non-cash, non-recurring and acquisition related expenses. 

Through the nine month period ended 30 September 2016, Perk generated US$52.8M in revenues and US$3.4M in adjusted* EBITDA. As at September 30, 2016 and December 31, 2015, Perk reported gross assets of US$45.7M and US$49.5M, respectively. The Acquisition is forecasted to be accretive to RhythmOne in Financial Year 2018, being the first full year of ownership.

The Company expects to benefit from certain cost synergies post-Acquisition, as a result of rationalizing redundant public company costs, and marginal drawdown of combined revenues that are considered Non-Core and non-strategic across the enterprise.

Transaction Details

Pursuant to the terms of the Agreement, the Company shall acquire the Perk Shares for total consideration of approximately US$42.5M inclusive of certain employee options, payable in RhythmOne shares at a price of £0.381 per share, equal to RhythmOne’s volume weighted average price (“VWAP”) for the 30 trading days ending on 2 December 2016. As a result of the Acquisition, RhythmOne will issue 88,235,014 new RhythmOne shares, raising the total number of outstanding shares to 494,004,257.

Upon completion of the Acquisition and exercise of Perk’s employee options, each Perk Share will be exchanged for 4.5116 RhythmOne shares. Using a CAD/GBP exchange rate of 1.6868, on 2 December 2016, the value of the consideration to be received by Perk shareholders based on RhythmOne’s 30-day VWAP of  £0.381 per share will be approximately C$2.90 per Perk Share,  representing a premium of 11.5% to Perk’s closing price of C$2.60 on 2 December 2016, and a premium of 43.6% to Perk’s 30-day VWAP of C$2.02.

Subject to Perk shareholder approval and the satisfaction of other customary conditions, RhythmOne and Perk expect to complete the Acquisition in January 2017.

The Acquisition will be carried out by way of a court-approved “Plan of Arrangement” under Ontario, Canada laws, subject to certain customary conditions, including the approval of not less than 66-2/3% of the votes cast at a special meeting of Perk securityholders that is expected to be held in mid January  2017.  Pursuant to the terms of the Agreement, the Acquisition is also subject to the satisfaction of certain closing conditions customary for transactions of this nature. The Agreement also provides for, among other things,  Board support and non-solicitation covenants from Perk (subject to customary “fiduciary out” provisions that entitle Perk to consider and accept a superior proposal and a “right to match” in favour of RhythmOne). The Agreement also provides for the payment of a termination fee to RhythmOne in certain specified circumstances.

The Board of Directors of RhythmOne and Perk have each unanimously approved the Acquisition. Perk’s Board of Directors has also recommended that its security holders vote in favour of the Acquisition, while RhythmOne shareholders have generally authorised, at its Annual General Meeting held earlier this year, the Directors to issue sufficient number of shares to close the Acquisition. Beacon Securities Limited has provided an opinion to Perk’s Board of Directors to the effect that, as of December 4, 2016 and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be received by Perk shareholders pursuant to the Acquisition is fair, from a financial point of view, to such Perk shareholders. Perk’s directors and senior management, and AVG Ventures, LP, representing, in the aggregate, approximately 39% of the issued and outstanding Perk Shares, have entered into customary voting and support agreements pursuant to which, they have agreed to vote their Perk Shares in favour of the Acquisition.

Copies of the Agreement and certain related documents and agreements will be made available on RhythmOne’s corporate website and Perk’s System for Electronic Document Analysis and Retrieval (SEDAR) profile.

Cormark Securities Inc. is acting as financial advisor to RhythmOne and DLA Piper (Canada) LLP is acting as legal counsel to RhythmOne in connection with the Acquisition.

Commenting on the Acquisition, S. Brian Mukherjee, CEO of RhythmOne, said:

“The acquisition of Perk builds on our transformation toward Core mobile, video and programmatic products that drove strong results in the first half of FY2017. RhythmMax, which is now in full commercial production, is the principal driver of RhythmOne’s growth and provides significant operational gearing potential. Our goal now shifts to fortifying and scaling the platform, and Perk’s products are perfectly aligned with this strategy – allowing us to programmatically enable the Acquisition’s premium inventory. Perk adds unique mobile supply at scale, as well as key strategic demand relationships that are complementary to ours.  I would like to welcome the talented Perk team, led by CEO Ted Hastings, which has successfully built and run B2C properties, adding executive depth to the Company.

Perk is expected to materially advance our financial performance and help us to scale a leading platform to drive Industry-wide consolidation in the second coming of Ad Tech.  As the Industry evolves, direct engagement with consumers at scale is critical. Consistent with this we will look to grow and develop Perk’s owned and operated apps and websites to further our vision to build the most efficient and effective platform for digital advertising and content distribution globally.” 

The Company will be holding a conference call for analysts at 8.30AM GMT on Monday, 5 December 2016.

Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) prior to its release as part of this announcement.

Non-IFRS Measures

*Perk defines Adjusted EBITDA as net income (loss) from operations before: (a) depreciation of property and equipment and amortization of intangible assets; (b) share-based compensation; (c) income tax expense (recovery); (d) transaction and restructuring costs; and (e) other charges, net. Management uses Adjusted EBITDA as a measure of Perk’s operating performance because it provides information related to Perk’s ability to provide operating cash flows for acquisitions, capital expenditures and working capital requirements. Perk also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry. Adjusted EBITDA should be used in addition to and in conjunction with the results presented in Perk’s unaudited interim condensed consolidated financial statements prepared in accordance with IAS 34. Management strongly encourages investors to review Perk’s financial statements in their entirety and to not rely on any single financial measure. As non-IFRS financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-IFRS financial measures having the same or similar names.

About RhythmOne

RhythmOne is a technology-enabled digital media company that connects online audiences with brands through premium content across devices. Founded in 2004, the Company pioneered Internet video search and works with digital advertisers, publishers and content providers to offer fully integrated, cross-screen solutions that span desktop and mobile video, rich media, display, social and native advertising, and content formats. Through its fully integrated programmatic platform, RhythmMax, the Company represents digital advertising inventory across owned, controlled and extended supply sources. The RhythmMax platform includes unique brand safety technology, RhythmGuard, which combines leading third-party verification and proprietary filtering technologies to ensure inventory quality in brand safe environments.  RhythmOne’s goal is to maximize the return on advertising spend and provide the most efficient and effective marketplace for digital advertising. The Company is headquartered in San Francisco, California with offices in the US, UK and Canada. For more information please visit

Analyst and Investor Contact                                    
Dan Slivjanovski                                                         
RhythmOne plc                                                                       

Financial Media Contacts
Edward Bridges / Charles Palmer
FTI Consulting LLP
(UK) 020 3727 1000                                                  

Nomad and Broker for RhythmOne
Nick Westlake (Nomad) / Lorna Tilbian / Mark Lander
Numis Securities Limited
(UK) 020 7260 1000