Nazara plans to acquire 55% of Dataworkz, a digital advertising company.
Key points to note –
- Dataworkz was founded in 2013 by Senthil Govindan, an IIM Ahmedabad Alumnus. For the calendar year 2021, it reported Revenues of Rs 90.7 Cr and EBIDTA of Rs 11 crore. As the net profit number is not disclosed, very likely that they are negligible or maybe even loss making. 70% of the reported revenues are contributed by US.
- Nazara plans to acquire 55% stake in two tranches
- 33% stake for Rs 60 crore in stage 1 to be concluded by April 2022. Rs 35 crore will be paid in cash and balance Rs 25 crore either in cash or share swap. Implied valuation for this tranche is Rs 182 cr.
- option with Nazara for additional 22% by Q4 FY 23. Valuation for this tranche can get extended upto Rs 225 crore based on Dataworkz’s CY 2022 EBITDA performance.
Rationale for the transaction –
For Nazara – the company has been looking to grow through inorganic route. Dataworkz, also allows it to improvise it’s own underlying business by trying to optimize customer acquisition spends as well as monetize the customer base.
For Dataworkz – I don’t think they were left with many options given the underlying performance of the business. In my personal view, promoter got an option to monetize and also play on future with support of a larger Company and he decided to align.