Why Did IMImobile Acquire This UK Based Mobile Communications Company For £13.15M

The inside story of IMIMobile acquiring UK based mobile communications company TextLocal for £13.15M

IMIMobile_textlocal

Thanks to the millennials, mobile messaging has started a revolution. Not only are consumer messaging apps making noise with their ever-growing monthly active users but enterprise messaging apps are also beating the drums. Businesses are getting hungry to build a strong communication wave with the SMBs of the world. Analysts believe that SMB messaging space is one of the fastest growing segments.

UK based Textlocal, a mobile communications company founded in 2005 is one of those companies that is making the market believe strong on mobile messaging for SMB’s. The company founded by Alastair Shortland and Darren Daws has served over 100,000 businesses since its foundation in 2005 with a 95% customer satisfaction rating. This best in class messaging solutions focused on SMBs attracted IMImobile, a global technology company providing software and services which help businesses capitalize on the growth in mobile communications.

After four months of conversations, IMImobile, headquartered in London with offices in Hyderabad, Atlanta and Dubai went ahead and acquired TextLocal for Rs 102.1crore (£13.15 million) in stock and cash. The initial consideration for the deal is worth £10 million cash and £1 million by way of IMImobile’s shares with a deferred consideration of up to £2.15 million. “The acquisition was aligned with the company’s long-term growth strategy, “ said  Jay Patel, CEO of IMIMobile in an email interaction with Lighthouse Insights.

Sharing more insights on the business decision, Jay added, “IMImobile has identified significant opportunity to leverage its global footprint to introduce TextLocal’s messaging platform to new international markets, industries and clients. This product suite will complement IMImobile’s business allowing it to target a new market segment in UK and roll this out internationally.”

Besides the TextLocal platform, a key attraction for IMImobile was the TextLocal team, who have successfully developed and sold its market leading platform with a track record of delivering revenues, profits and cash flow. “TextLocal fits well with IMImobile’s strategy of providing last mile connectivity augmented with effective solutions for customer engagement and business productivity to organizations of all sizes,” said Jay.

Named one of the fastest growing technology companies in 2013 by Deloitte and GP Bullhound in 2014, TextLocal is the leading mobile communications company focused on enabling SMBs to harness the capabilities of mobile messaging. Based in Chester and Malvern, TextLocal has served over 120,000 businesses, including customers such as Debenhams, Paddy Power, Greenpeace, Groupon and P&O Ferries.

Its services include Inbound and outbound SMS and MMS communications using a web-based control panel, SMS Gateway and MMS API, mobile web page creation, mobile forms and surveys, SMS attachments and mobile vouchers and loyalty cards. Strong track record of TextLocal’s profit and cash generation with revenue and profit after tax of £7m and £1m, respectively, for the year ending 30 November 2013.

Jay Patel & Jason Palgrave-Jones
Jay Patel & Jason Palgrave-Jones

While IMImobile gets the technology and talent with the acquisition, TextLocal and its customer base will benefit from IMImobile’s capabilities of delivering multi-channel customer engagement and mobile payments solutions that work in synergy with TextLocal’s innovative features such as mobile vouchers and ticketing.

“We believe the acquisition by IMImobile will allow TextLocal to stay at the forefront of a fast-moving and competitive market. The acquisition will also strengthen our capabilities to deliver service innovation and significantly extend our international client base,” said Jason Palgrave-Jones, MD TextLocal in an email conversation with Lighthouse Insights.

Over the next six months, IMIMobile hopes to integrate TextLocal into the group with the expectations of enhancing earnings. “We look forward to working with IMIMobile that delivers mobile services to more than 60 countries. A key focus of our strategic partnership will be the development of new innovative products such as mobile vouchers, loyalty and ticketing to drive new revenue streams in both domestic and international markets,” said Jason.

IMImobile with more than 650 employees worldwide reported a revenue of £43.4 million for the year ended 31 March, and net profit of £3.9 million for the same period. The company hopes that the acquisition will enhance IMImobile’s earnings from the second half of the year ending 31 March.

Seeing the last reported revenue stream looks like TextLocal wouldn’t disappoint IMImobile which recently released revenues from Europe (underlying) region was at £21.1 million for the year, a marginal 4% growth from £20.3 million in the previous year. Though it reported India & South East Asia revenues of £8.5 million for the financial year ended March 31, 2014, registering a 21% decline from £10.8 million in the previous year.