Contact: Brenon Daly
Following an M&A spree earlier this year that had some on Wall Street skeptical, KIT digital says it’s now in ‘harvest’ mode from its earlier deals. In the first four months of 2011, the video asset management (VAM) vendor scooped up five companies. Although that’s the same number of deals it did in all of 2010, KIT digital’s recent acquisitions have been dramatically larger than the transactions inked last year. The collective tab of slightly more than $200m for 2011 deals is five times the amount the company spent last year.
KIT digital’s big spending brought out some bears. The stock has shed about one-third of its value so far this year, compared to the flatlining Nasdaq. (It dropped another 10% on Thursday after KIT digital announced that it will be selling about $30m worth of shares at a price that’s only slightly above the low point of its valuation over the past year. The stock, which opened the year above $16, traded around $9.50 on Thursday afternoon.)
In addition, the number of people who are shorting KIT digital has doubled since the company started its fast-track M&A program. According to the most recent numbers, nearly 10 million shares of KIT digital are sold short, up from 4.4 million at the start of 2011. Conscious of that, the company said earlier this week at the ThinkEquity Growth Conference that it was almost certainly out of the M&A market for now, and that its financials are getting much ‘cleaner’ now that it has closed – and accounted for – its recent acquisitions.
Contact: Ben Kolada
No stranger to inorganic growth, video asset management provider KIT digital just announced three acquisitions worth $77m. The company’s recent dealmaking brings its total M&A spending to $151m since 2006 – a hefty sum considering that KIT currently sports just a $350m market cap. While similarly sized firms might stop for a breather, KIT plans to announce another large purchase by the end of the quarter.
KIT has bought KickApps, Kyte and Kewego as it continues to consolidate the video asset management market and add social media to its platform. Kyte, the least expensive of the three targets, will provide KIT with mobile video content delivery while Paris-based Kewego provides a video distribution software platform for internal communications to enterprises in the EMEA region. KickApps, arguably the most valuable of the acquired assets, provides social media software for interactive video to enterprises. (A side note: KickApps is betting the farm on the role that social media will play in KIT’s evolving business – the company’s equity holders took their $45m payout entirely in KIT digital stock.)
As if announcing three acquisitions at once isn’t enough, the company claims to be on track to close another large transaction by the end of the quarter. KIT wouldn’t comment on who its next target would be, and the video asset management market is still too fragmented to tell which companies are on KIT’s radar. But we expect that the new target will continue KIT’s M&A strategy of buying companies for geographic expansion, entry into new verticals and complementary technology. KIT will pay for its new property out of the proceeds from its recently closed IPO, which netted $103m.
KIT’s triple play
|January 28, 2011
|America’s Growth Capital
|Janney Montgomery Scott
|January 26, 2011
|No adviser used
|January 25, 2011
|GrowthPoint Technology Partners
|No adviser used
Source: The 451 M&A KnowledgeBase