Some shareholders in IBG, parent company of AffiliateFuture, have expressed concern about the decision to effectively sell the network to direct marketing company TMN Group (formerly The reason is because the acquisition values each IBG share at a miserable 12.75 pence and the whole of IBG at a mere £9.84 million.

This compares to a share price of 28 pence six months ago on 20 June, 2007 and talk of IBG shares looking to hit the 40 pence mark.

“I think what has happened over the past 6 months is a bloody disgrace”, says a shareholder who goes by the name Omlaysause on the stockmarket forums. “First off we get that ridiculous RNS saying we MAY have a problem with profits and then to say it could be effected for 2 years, which as we all know, killed the SP there and then. Coupled with the strategic review which turned out to be a complete waste of time. We are then told, don’t worry lads, we’ve got some great ideas and you’ll all reap the benefits if you stick around for the next 2 years. Then a few months later, do you know what, we’re just going to sell up with no benefit to the IBG shareholders in the deal, it’s a simple swap of IBG to TMN.”

Most IBG shareholders have expressed similarly negative views on as they’ve felt that, by selling when the share price is at its lowest point in years, and by selling without a premium, they’ve been let down.

However, some of the biggest losses will be incurred by IBG Directors who hold substantial holdings in the company. As recently as 7 August 2007, Non-Executive Director Nicola Costa and CEO Maziar Darvish bought £99,755.84 of shares between them at around 16.5p.

The buyout/merger ends a year which has seen a number of affiliate networks and what could be more or less described as affiliate companies come together. Examples of notable tie-ups include TradeDoubler and The Search Works, and Lightstate, Linkshare and as well as and AffiliateFuture and NetFreeStuff.

The two CEOs, Maziar Darvish and Mark Smith, are both astute businessmen and will have made the decision with the best interests of their ‘babies’ at heart: the greater size will bring cost savings and there will be the potential to cross-sell services.

With email marketing companies always hungry for campaigns and with affiliate networks always desperate for means to market their advertisers, this could be the perfect marriage of convenience… even if there is discontent about the amount of dowry paid.

You can read the full buyout/merger statement below:

“TMN – Nil Premium Merger with IBG

14 December 2007

Not for release, publication or distribution, in whole or in part, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction


The Boards of TMN Group plc (‘TMN’) one of the UK’s premier online direct marketing groups, and Internet Business Group plc (‘IBG’), the online advertising and media specialist, are pleased to announce that they have reached agreement on the terms of a recommended proposal for TMN to acquire the entire issued and to be issued share capital of IBG by way of a share-for-share exchange.

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Key points

  • The Acquisition will be effected by means of a scheme of arrangement between IBG and its shareholders pursuant to section 425 of the Companies Act 1985. The Scheme requires the approval of IBG Shareholders and the sanction of the Court.
  • Scheme Shareholders will receive 1 new ordinary share in TMN for every 3.765 ordinary shares held in IBG. Based on the Closing Price of 48 pence per TMN Share and 12.75 pence per IBG Share on 13 December 2007, being the last business day prior to this announcement, the Acquisition values each IBG Share at approximately 12.75 pence and the existing issued share capital of IBG at approximately £9.84 million. This represents a nil premium to the Closing Price of 12.75 pence per IBG Share.
  • A maximum number of approximately 21.0 million New TMN Shares will be issued pursuant to the Acquisition if all IBG Options are exercised (including those with an exercise price greater than the consideration per IBG Share receivable under the Acquisition). Assuming no options in either IBG or TMN are exercised prior to completion of the Acquisition, a maximum number of approximately 20.5 million New TMN Shares will be issued, such that IBG Shareholders will hold New TMN Shares representing approximately 29 per cent. of the enlarged issued share capital of TMN immediately after completion of the Acquisition.
  • The New TMN Shares will be allotted and issued credited as fully paid and will rank pari passu in all respects with the TMN Shares in issue at the time the New TMN Shares are allotted and issued, including the right to receive and retain dividends and other distributions declared, made or paid after the Effective Date.
  • TMN’s services include email and website marketing (TMN Media), full service digital advertising (EDR), online fieldwork solutions (iD Factor) and research analysis (ICD Research). For the year ended 30 April 2007, TMN reported revenue of £16.1 million and operating profit of £3.3 million. For the six months ended 31 October 2007, TMN reported revenue of £9.0 million, and headline profit before tax of £1.4 million..
  • IBG’s operations are divided primarily into the following three divisions: AffiliateFuture (a Performance Marketing network), IBG Media (brokering traffic as well as publishing a variety of websites), and E-commerce (websites retailing product lines across several sectors within sports and lifestyle). IBG is today announcing its preliminary results for the financial year ended 31 October 2007, reporting revenue of £16.4 million, profit before share based charges, interest, taxation, depreciation, amortisation IFRS share based charges and movement in investments of £1.6 million, and profit before taxation of £0.92 million.
  • The IBG Directors and TMN Directors believe that the Acquisition will result in an Enlarged Group with significant commercial and financial advantages for the shareholders of both companies.
  • As one of the UK’s premier online direct marketing groups, TMN will bring to the Enlarged Group extensive experience and scale advantages. TMN’s strategy is to increase its UK online direct marketing service range with view to controlling more of advertisers’ online spend in a rapidly expanding market.
  • The IBG Directors believe that their strategy of creating a substantially larger advertising and media operation can best be achieved at this time by means of the Acquisition.
  • There is little cross-over at present between the TMN and IBG customer bases, providing potential opportunities to cross-sell products and services.
  • The IBG Directors believe that the Acquisition should allow IBG to accelerate its existing growth strategy by leveraging TMN’s complementary resources and expertise. Taking all of the above factors into account, the IBG Directors believe that the Acquisition is in the best interests of IBG Shareholders and therefore unanimously recommend that they vote in favour of the resolutions to be proposed at the Court Meeting and the General Meeting.
  • In aggregate, TMN has received irrevocable undertakings to vote in favour of the Scheme in respect of 37,350,270 IBG Shares in aggregate representing approximately 48.39 per cent. of IBG’s existing issued share capital.
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Mark Smith, CEO of TMN, said:

‘Bringing the two Groups together, with their obvious synergies and exciting market potential, represents an opportunity to continue our strategic focus on building an Enlarged Group providing a broad range of high quality, online advertising, marketing and research services.

The market in which we operate continues to grow and present new opportunities, and TMN will continue to evolve to meet the needs of the market. We see excellent synergies between the businesses and feel that this is a significant step in achieving our long-term vision.’

Maziar Darvish, CEO of IBG, said:

‘We believe that as part of a larger integrated group, we will be better positioned to exploit the significant opportunities within the marketplace.

The structure of the deal and the combination of two such highly complementary businesses is expected to enhance value for shareholders in the medium to long term. With these factors in mind, the Directors unanimously recommend that the
shareholders vote in favour of the resolutions to be proposed at the Court Meeting and the General Meeting.’

Investec is acting as sole financial adviser and corporate broker to TMN. Strand Partners is acting as financial adviser to IBG. St Helen’s Capital plc is acting as corporate broker to IBG.”