Xtreme embarrassment as VSS private equity owners sell to Ebiquity at a £15m loss

Having invested £30 millionin the UK based advertising monitoring business Xtreme Information Services, only to see it run up losses of over £23 million in eight years, US private equity house Veronis Suhler Stevenson (VSS) has now agreedto sell its near 92% stake to AIM listed Ebiquity in return for a minority shareholding in that company.

Virtually no cash will pass on completion of the deal, but it will leave VSS nursing an embarrassingly heavy loss of about £15 million on its Xtreme investment. Presumably it hopes to see some upside from its stake in Ebiquity.

The deal may provide VSS managed funds with some more cash in due course. Under the terms, part of the £17.9 million purchase price will be in convertible loan notes worth a little less than £7 million. But if the loan notes are not redeemed in cash by the conversion date, they will be replaced by an increased shareholding in Ebiquity that is not expected to exceed 42%.

The initial share component of the deal will give the VSS funds 27.7% of Ebiquity. Xtreme’s chief executive John Gordon will also receive a more modest 2.2% shareholding in Ebiquity in exchange for his current holding in Xtreme.

Last year Xtreme still owed VSS about £5 million that had been lent to the company. It is not clear whether the loan has been repaid since or whether Ebiquity is also taking over that liability. In any event, Ebiquity has arranged a new £12 million borrowing facility with Bank of Ireland.

The attraction of the deal to Ebiquity is fairly obvious. Xtreme will addto its critical mass both in the UK and overseas without any initial cash outlay beyond about £800,000, unless it has also agreed to pay off the £5 million VSS loan. Operational cost savings may also be available. In addition, Ebiquity will be released from the burden of having to amortise the over-valued price paid by VSS for Xtreme in the first place. But the jury will remain out on what scale of profit Mike Greenlees and Nick Manning can squeeze out of their new plaything, although the stock market gave the deal an immediate“thumbs up” with a 24% jump in Ebiquity’s share price.

Ebiquity is also acquiring the remaining 50% of the shares in its German monitoring joint venture Thomson Media Control for £0.8 million.

Xtreme is not the onlyinvestment by VSS in a UK marketing business. In 2007 it invested a reported £12 million in design consultancy Loewy Group.

© Fintellect Ltd

  • Chris Arnold
  • Jack Wallington

    Facebook, confirmed by Twitter

  • Andrew Terry

    I heard through the radio  in the car

  • Adrian Zambardino

    Old fashioned TV – BBC News 24,

  • Sara Wilson

    I heard through friends on Twitter, soon confirmed by media profiles on Twitter.

  • Jennifer Burnage


  • James Pearson

    I learnt from a text by my friend in the media who said it hadn’t been leaked yet and was due to be announced in 7 minutes. I checked on twitter, it was trending 29 minutes earlier, apparently before her dad had been informed (as he was on a flight to New York).

  • Joanna Bowery

    Email alert from the BBC.

  • Amy Finlayson

    Heard it first on Facebook on my mobile

  • Jo Weston

    Radio in the car.  

  • Rebecca Martin

    good old fashioned word of mouth. 

  • Mark Wood

    Twitter on the phone. Confirmed on BBC link off twitter.

  • Stephanie Stern

    text confirmed by online paper, then twitter

  • Carly Tait

    By text

  • Phil Cresswell

    I missed the news this weekend but thanks to RadioWorks using Amy’s death to promote there Weekly Poll in their Monday circular email, (win tickets to the Athletics) I soon pieced it together!!

  • Chris Arnold

    Does speed matter? Have we become too focused on having things instantly? Remember when we had news at 6 or 10. Then every half an hour on the radio. Now every second on digital. And the gain is?

  • Lucy Burnham

    At a barbecue and someone in a nearby house shouted the news out of the window.  After which there was a general scramble for iPhones…

  • Khadeen O’Donnell

    I heard it through BBC News