Blue Focus To Be Acquired, Rebranded Blue Impact
- by Steve McClellan @mp_mcclellan, August 23, 2019
Cincinnati-based Legacy Acquisition Corp. has announced a definitive agreement to acquire Chinese marketing company Blue Focus in a stock transaction that includes assumption of debt and other obligations, including potential future earn-outs.
The total value of the deal could exceed $500 million.
When the transaction closes, the entity will be renamed Blue Impact. Its companies will include Canadian marketing and communications services firm Vision7, whose holdings include San Francisco-based agency Eleven, Cossette Communications and other firms.
Blue Focus also owns UK-based social agency We Are Social, now with offices in 11 countries, San Francisco-based design agency Fuseproject, Hong Kong-based marketing agency Metta, and Shanghai-based Madhouse.
Upon closing, the Blue Impact business will be led by Brett Marchand as CEO, who is currently CEO of Vision7. He’s been with the company 14 years and previously held a number of marketing roles at Procter & Gamble, Campbell Soup and Molson Coors.
advertisement
advertisement
Holly Zheng will serve as chairwomen of the post-acquisition Blue Impact board. She is currently president of Blue Focus’ international business.
Under the terms of the agreement, at closing, the selling entity will receive 30 million shares of Class A common stock of Legacy, and Legacy would assume $40 million of net debt related to the Blue Impact business and $48 million of deferred acquisition purchase price obligations.
At the close of business on Thursday, August 22, the closing price of Legacy’s shares of Class A common stock was $10.17 per share. In addition, up to $222 million may be payable after the 2022 audit is complete in the form of an incentive-based earn-out tied to average profit growth of the Madhouse business over the three-year period ending December 31, 2022.
At closing, the combined company is projected to have approximately $176 million of cash available for acquisitions and working capital.
The boards of directors of both companies have each unanimously approved the proposed transaction. Completion of the deal is subject to the approval of Legacy stockholders and other customary closing conditions. The parties expect the transaction will be completed later this year.
Blue Impact will be based in Mountain View, CA.
Since all parties are Blue Focus entities, this deal looks like more of a way to move BFG assets out of China and perhaps limit regulatory and financial exposure. Blue Focus lost a bid to acquire a US social data platform company at the end of 2017 when CFIUS objected. That may still haunt the Beijing based BFG. Blue Impact may be able to operate without attracting such scrutiny in the west.