EUniverse, Inc. the interactive entertainment network, will acquire direct marketer L90, Inc. in a cash deal worth up to $55 million.
The resulting efficiencies will help L90, which has suffered from the online ad slowdown, attain profitability, executives said during an investor conference call.
In addition, the merger will add more than $2 million in net income to the eUniverse balance sheet in the first year, according to eUniverse CEO Brad Greenspan. That money will come from cost savings, and from incremental revenue estimated at $10 million to $15 million.
The deal calls for stockholders to get between $2 and $2.20 per share in cash, a 33% premium above recent stock levels, executives said. However, the payment will be made in two parts.
The first component will be a special cash distribution by L90 prior to the merger totaling between $1.80 and $2 per share. That amount would be based on the amount of cash held by L90 and the value of certain balance-sheet items.
In the second part, eUniverse would acquire all of the outstanding shares for a price of roughly $.20 per share or a total $5.1 million.
However, eUniverse’s net cash outflow will total only $2 million because L90 will leave $3.1 million in the company to satisfy liabilities.
L90 now has roughly 25 million undiluted shares, meaning that the final price will range between $50 million and $55 million, executives said.
Asked by analysts how L90 will get rid of its operating losses, Greenspan noted that the firm is “in the process of divesting certain businesses that chew up some of its cash.” In addition, he said, “We have a plan to
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