Digital advertising business bidstack, which places adverts into popular games like Football Manager 2018, has announced plans to enter the AIM market by reversing into cash shell Kin Group (LSE:KIN). The two firms are working towards a reverse takeover (RTO) that will see Kin invest £400,000 to acquire bidstack’s entire issued share capital.
The transaction is expected to complete by 31 August 2018, with bidstack planning to raise further working capital for the enlarged group by placing shares to institutional and other investors. Bidstack has developed technology to put digital advertising directly into virtual billboards in computer games and intends to launch with Football Manager 2018 this month, in time for the FIFA World Cup.
The advertisements can be targeted, meaning two different players would see different adverts, and look like you would expect to see them in real stadiums and race tracks.
The company also has exclusive rights to place digital advertising into games such as Cricket Captain and Sociable Soccer and is in discussions with other titles and publishers to secure further rights. According to the business, in the 14-month period from 1 November 2016 to 31 December 2017 it had a turnover of approximately £10,000 and generated a loss of £434,000.
If successful, the transaction with bidstack will have come just in the nick of time for Kin. The business was formerly a fitness tracking start-up called Fitbug. Once worth £296m, it was sold to an Australian firm for just £50,000 in September last year after failing to compete with rivals like Apple and Fitbit.
Following this, Kin became a cash shell and hired a new board who tasked with attracting an RTO. However, the company’s shares were suspended in February after it failed to secure a deal within the required six months under AIM rules. It now has until 31 August 2018 to complete an RTO or risk completely losing its AIM listing.
Donald Stewart, chairman of Kin, said: ‘We are very pleased and excited to be working with bidstack towards a RTO which we believe will be transformational for Kin’s shareholders. bidstack is a dynamic, young business in a sector that we believe is capable of significant short and medium-term growth. We believe that bidstack is currently the only media owner in the native in-game, programmatic digital advertising arena. Leveraging bidstack’s technology we believe we can provide additional sources of revenue for games producers and publishers which will become increasingly valuable in an environment in which digital games are subject to significant sales price pressure.’
James Draper, chief executive of bidstack, said: ‘This is an exciting moment for me and the team. We are looking forward to the completion of the RTO so that we can drive the business forwards to the next stage of our growth. By obtaining a quotation on the AIM market we believe the RTO will be a great result for our current shareholders, who have supported us over the last three years and will provide us with a firm foundation for continued growth and win more commercial contracts with the leading publishers and advertising agencies. We are excited to be kicking off our platform just in time for the FIFA World Cup and looking forward to the prospect of delivering on our ambitious business plans.’
Given that Kin had a market cap of just £790,000 at its suspension, Bidstack will be an interesting stock to watch given that it has a reasonably intuitive, easy-to-understand business model. If the deal goes through then the firm’s readmission document will be well worth a read, as any deal could well be done at a premium.
Author: Daniel Flynn
Disclosure: The author does not own shares in the company mentioned in this article