Swift Media sells medical channel for $3.2m, two years after buying it for $4.5m
Health & Biotech
Health & Biotech
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Swift had already outsourced national advertising sales for its Medical Media business to Motio last year and is now selling them the company outright in the all-scrip deal. Medical Channel Pty serves up a silent stream of quizzes, health news and advertising to more than 2,500 screens in doctor’s waiting rooms across the country.
“The deal will provide further reach, scale and impact for our Motio Media business, as we continue to enhance our ownership position in the Digital Place Based sector,” said Motio chief executive Adam Cadwallader.
Formerly known as XTD, Motio last year acquired oOh! Media’s “mega medical centre” display networks and also has media channels for convenience and petrol stores and indoor sporting environments.
Swift agreed in December 2018 to buy Medical Media for $4.5 million upfront in Swift shares, plus up to $20.5 million in performance targets. Swift said at the time the acquisition was “expected to cost synergies of circa $3 million p.a.” The transaction closed in February 2019.
(In March 2020, Swift sought to renegotiate the deal, in a move that would have transformed the 68.1 million in performance shares to 18.75 million ordinary shares. But the ASX never approved the change, according to a company representative, so the four-year performance shares remain outstanding, with none as yet converted into SW1 shares).
Under the leadership of Pippa Leary, who was appointed CEO in June 2019, Swift has moved to simplify its “closed loop” entertainment business, exiting verticals in e-sports, maritime, student accommodation and oil rigs.
Now Swift will be streamlined further, focusing on delivering content such as movies and television shows to mining camps and retirement homes.
Given how much SW1 Paid for these assets originally, perhaps they just don’t want to say now!
— Joel (@bsh_au) March 30, 2021
Leary said in January 2021 that “restructuring initiatives” had ensured the profitability of the medical channel, which she said in September 2020 was “burning cash” and had an “unsustainable cash structure” when Swift bought it.
The business made $572,000 in net cash in the second quarter, on $1.785 million in customer receipts.
Under the sale agreement, Swift will be issued 30 million shares in Motio, giving it a 12.85 stake in the company. Motio shares closed Tuesday at 10.5c, giving the deal a valuation of $3.15 million.
“We are excited by the combination of Swift’s Health and Wellbeing assets with Motio,” Leary said.
“The enlarged business has a clear growth strategy, singular focus and the ability to deliver value across one of Australia’s premium place-based media assets.
“The retained equity stake in Motio will enable Swift’s shareholders to benefit from synergies and growth.”
At noon, Motio shares were up 4.8 per cent to 11c. Swift shares had last traded on Tuesday, at 2.8c.