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ITV plc acquires Friends Reunited Ltd

ITV will acquire the holding company of the group for an expected initial consideration of up to £120 million to be satisfied by a mixture of cash from ITV’s existing facilities and the issue of notes and ITV shares. A further payment of up to £55 million may be made during 2009 based on EBITDA performance targets.
The acquisition is part of a strategy to build content based businesses which create and monetise direct consumer revenue for ITV. ITV’s Consumer team has already successfully launched ITV Mobile and ITV Local, a broadband TV trial, earlier this year, and will launch a new interactive TV service, ITV Play, in the New Year.
Friends Reunited is forecast to make £12.4 million of revenue and £6.6 million EBITDA for the year end 2005 and £18.7 million revenue and £8.9 million EBITDA for 2006. The acquisition is earnings enhancing within the first 12 months and represents a multiple of 13.5x, based on 2006 EBITDA.
Friends Reunited is the leading reunion web site in the UK and Australia, with 15 million registered UK members across their sites - representing 50% of the adult online UK population - and more than 1 million paying subscribers.
The business currently comprises of five segments driven by subscriber generated content and the Friends Reunited database: Friends Reunited - a schools alumni site; Genes Reunited - a genealogy site; Friends Reunited Dating; Friends Reunited Jobs and Connections – a social networking site.
With UK broadband penetration set to reach 50% of homes by 2010 and UK internet advertising spend predicted to rise above £1 billion in 2006, the acquisition enables ITV to strengthen significantly its current online presence, adding Friends Reunited to and ITV Local.
The acquisition makes ITV’s family of sites the largest UK-owned commercial online business.
Jeff Henry, Director of ITV Consumer, said: “This deal combines Britain’s most popular commercial broadcaster with some of Britain’s biggest websites and most popular content online. Together they give ITV an unmatched commercial presence in the UK on television and online.
“The acquisition of Friends Reunited is also a key step in the delivery of our strategy to drive new revenue streams for the company. I am confident that Friends Reunited’s unique sites and comprehensive subscription base, combined with ITV’s services and vast range of content will prove both compelling and profitable.”

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