Digital marketing solutions firm Brightcom Group (BCG), which had in December last year entered into an agreement to acquire Indian digital consulting firm MediaMint for Rs 566 crore in a cash and stock deal, has on September 6 decided to call off the proposed buyout.
Instead, Brightcom and MediaMint have jointly decided to change the transaction towards a strategic alliance wherein the latter will provide backend services to the former’s future acquisitions.
Brightcom expects the decision to call off the buyout of MediaMint to help it conserve the capital to be deployed for future acquisitions.
In a communique to stock exchanges on September 6, Brightcom said some of MediaMint’s recent client additions were in the same business that could impact the growth prospects of the combined business.
“As a result, the companies determined it was best to pursue independent paths of growth,” said Brightcom in its communique, adding that both the companies have experienced rapid rise in revenue and profitability in FY2022.
Further, Brightcom said the decision to call off the acquisition of MediaMint “has the beneficial effect of conserving capital to be used for other acquisitions as and when they get consummated. For MediaMint, this enables them to seek growth plans that may not have been possible due to this acquisition transaction.”
When contacted, the Brightcom Group managing director M Suresh Kumar Reddy told Moneycontrol, “An effective growth strategy uses both mergers and acquisitions, and partnerships to drive expansion. We are figuring out what is better for which situation and critical for a good RoI.”
Brightcom, which posted a consolidated post-tax profit of Rs 912 crore on a revenue of Rs 5,019 crore for the fiscal ended March 2022, had a series of 10 global acquisitions over the last few years that currently account for over $300 million of its revenues.
On September 6, Brightcom stock ended 3.89 percent lower on BSE at Rs 40.75 on the day the exchange’s benchmark indices closed 0.08 percent lower at 59,196.99 points.
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