Agency group Kin + Carta could go private if £200m buyout deal goes ahead
Potential buyer Apax says taking marketing group off the stock markets will enable sustainable business growth. What would it mean for the business?
Kin + Carta could be acquired by Apax Partners if shareholders agree to its bid / Kin + Carta
Kin + Carta, the British digital marketing group previously known as St Ives, may be set for acquisition by Apax Partners, a London-based private equity fund.
In a statement released this morning, the company’s directors recommended Apax’s bid for the group.
The company employs approximately 1,800 staffers worldwide through companies such as e-commerce consultancy Loop, digital consultants Spire and software firm Melon.
John Kerr, chair of Kin + Carta, said the deal would allow the company to progress to the “next phase of development.”
“We believe the offer to acquire Kin and Carta by Apax Funds represents an excellent opportunity for the Company to accelerate ambitious growth plans and scale the business, building on the acquisition and integration of leading data and technology companies, the development of valuable technology partnerships, and the creation of a strong portfolio of enterprise clients,” he added.
Though the business was established as a printer and publisher, it grew through acquisitions to become a wider marketing group. A restructure and rebrand in 2018 saw some of its companies sold off as it pivoted to focus on the digital transformation sector.
Recent business growth has been slow, however. Kin + Carta’s half-year results for 2023 showed that like-for-like revenue declined by 6%, while net revenue in its core UK market fell by 16%. The company’s profit for the first six months of this year was £6.5m.
According to Tony Walford, partner at M&A advisory Green Square, the group performed less well than had been expected by industry observers.
“Following all that – although they’ve done great work, got great clients, all that good stuff – the company’s performance hadn’t really matched market expectations,” he tells The Drum.
Exposure to the same macroeconomic issues which have depressed ad spend across the sector, and an underweight share price, has held it back from expanding through deals of its own.
Apax intends to delist the company and take it private. This could help insulate the group from the broader market pressures that have held it back from growth in recent years.
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“These companies [like Kin + Carta] that are floundering around at a poor valuation, they can’t buy anything,” adds Walford. “They’re totally straitjacketed. It makes perfect sense for private equity to come in and take them off the market. Take them off the market and do something proper with it.”
In a statement, Apax said it wanted to invest in the business and “accelerate growth both organically and inorganically to continue building scale in key areas.
“The changing economic backdrop has highlighted the importance of scale and diversification in the DX sector. Apax believes that as a private company Kin + Carta will be better placed to make the investments necessary to position the business for long-term success,” the statement read. “A partnership with Apax away from the public markets is expected to improve the potential for laue creation compared to the status quo… and position the company to create long-term value.”
Based upon Kin + Carta’s current market capitalization and an offer of 110p per share, Apax could end up paying over £200m for the business.
Assuming no other bidders become involved, the process of delisting the company could progress swiftly – though a 75% majority of shareholders is required to accept Apax’s proposal.
Kin and Carta was the first B Corp to trade publicly on the London Stock Exchange.