For over 10 years, Archer has delivered critical consumer communications over mobile channels on behalf of leading banks, utilities and government. Products include personalised mobile statements, mobile marketing and customer service messaging and are considered highly complementary to the existing IMImobile offering.
Management considers the acquisition of Archer to be highly strategic with significant opportunities to leverage IMImobile’s African footprint to expand into the wider enterprise market.
The consideration, all payable in cash, consists of an initial consideration of $5.2m and a deferred consideration payment of up to $0.4m payable 90 days after completion.
After taking into account investment in integration and sales and marketing expenses, the company expects the acquisition to be earnings neutral in the current year and earnings enhancing thereafter.
Commenting on the Acquisition Jay Patel, Chief Executive Officer of IMImobile said:
“We see tremendous opportunities in Africa for enterprises to use mobile as a communication channel driven by the explosion of mobile devices and better networks as well as the limitations of the physical infrastructure. Archer has been successfully working with leading blue chip clients over many years and we believe that combined with IMImobile’s software and solutions we will be able to leverage the existing client relationships and extensive experience of the Archer team to seize this great opportunity.”
Background and reasons for the Acquisition
Over the next seven years mobile operators are planning to spend $100bn in expanding their coverage and capacity across sub-Saharan Africa and smartphone penetration is expected to grow from 72 million in 2013 to 525 million in 2020 according to the GSMA. As there is also limited physical infrastructure across Africa the addressable market for mobile engagement solutions will become more substantial as large enterprises embrace mobile as the major channel for customer communication.
Archer is an established leading provider of patented mobile engagement solutions in South Africa, working with mainly large customers, from various sectors including banking, government municipalities, satellite services, retail and mobile operators. Archer’s key products and services include mobile bank and credit statements, billing reminders and payment transaction services.
The acquisition of Archer further enhances IMImobile’s footprint across the region adding new customers across key verticals alongside existing mobile operator clients. Archer’s products will be integrated and offered as part of IMImobile’s international portfolio of enterprise mobile engagement solutions.
The experienced management and operational team within Archer is another key attraction for the transaction. They have successfully built and consistently grown a profitable business in South Africa serving blue chip clients for whom excellence in customer communications is expected. The team also adds a creative capability to IMImobile’s broader offering.
Archer fits well with IMImobile’s approach of acquiring access to customers, profits and positive cash flow, and helps strengthen the company’s position to exploit the enormous opportunities presented by the Africa market.