SITO Mobile to acquire recently bankrupt Hipcricket
What: Mobile engagement platform provider SITO Mobile Ltd. is seeking to acquire mobile engagement and analytics Hipcricket Inc. through a US $4.5 million in cash asset purchase agreement.
Why it matters: Following this acquisition, SITO Mobile could become one of the largest publicly traded Mobile Marketing and Advertising companies. SITO Mobile intends to continue to provide services and support to existing Hipcricket customers of which a substantial amount target the Hispanic demographic. However, the transaction is subject to a Bankruptcy Court supervised process under Section 363 of the Bankruptcy Code and is subject to an auction and Bankruptcy Court approval.
SITO Mobile Ltd., a mobile engagement platform provider, has announced that it has entered into an asset purchase agreement with Hipcricket Inc., a mobile engagement and analytics, for US $4.5 million in cash, to acquire substantially all of its assets.
The Agreement provides that SITO Mobile will offer employment to all of Hipcricket's employees. Subject to the closing of the transaction, SITO Mobile intends to continue to provide services and support to existing Hipcricket customers. As part of the transaction, Hipcricket Chairman and Chief Executive Officer, Todd Wilson, intends to join SITO Mobile during the transition for a period of six to twelve months.
"As a result of this transaction, if approved, SITO Mobile will become one of the largest pure-play, publicly traded companies in the mobile marketing and advertising space," said Jerry Hug, Chief Executive Officer of SITO Mobile. "Following a transformative year in 2014 which included 27% year-over-year revenue growth, the acquisition and integration of DoubleVision Networks, and the completion of a strategic financing with Fortress Investment Group, SITO Mobile entered 2015 poised for growth and expansion. Consistent with our goal to accelerate our growth, if completed, the acquisition of Hipcricket will bolster our services and solutions and increase our revenue from a customer base which would then include 38 of the Fortune 100 companies."
On January 20, 2015, Hipcricket filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the District of Delaware to facilitate the Agreement. The transaction is subject to a Bankruptcy Court supervised process under Section 363 of the Bankruptcy Code and is subject to an auction and Bankruptcy Court approval. The Agreement comprises the initial "stalking-horse bid" in the auction process, which are subject to higher and better offers. In addition, SITO Mobile has provided debtor-in-possession financing to support Hipcricket's ongoing operations during the bankruptcy.
Hipcricket reported revenues of US $26.7 million for the fiscal year ended February 28, 2014 and currently holds 21 U.S. patents covering technology inventions.