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August 23, 2019

Innocean to buy 85% stake in Melbourne-based Wellcom for $160m

PUBLISHED : August 01, 2019 - 13:55

UPDATED : August 01, 2019 - 13:59

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South Korean advertisement agency Innocean Worldwide said in a disclosure on July 31 it had agreed to buy a 85 percent stake in Australian marketing firm Wellcom Group for 225.9 million Australian dollars ($155.7 million).

The Seoul-based company will use its cash reserves to acquire the 33.7 million shares.

The deal will be wrapped up by Nov. 27. The process will first require three-fourths of the vote at a forthcoming shareholders meeting, followed by the approval of Australian authorities, an Innocean spokesperson told The Investor. 

Innocean’s acquisition of the Melbourne-based content production and management services provider is intended to enhance its performance and secure a long-term growth driver, according to a corporate disclosure. A weeklong external audit for the acquisition was conducted by KPMG Samjong Accounting until July 30.

Retail shareholders hold roughly a combined 35 percent stake of Wellcom. After the transaction, the remaining 15 percent stake, owned by Wellcom Chairman Wayne Sidwell via Sidcom, will be subject to a call option by Innocean between 2024 and 2026. The exercise price will vary depending on Wellcom’s average EBITDA growth for the three years up until the option exercise.  

Wellcom was founded in 2000 and was acquired by Well.com in 2005. It serves clients in Australia, the United Kingdom, New Zealand, Asia and the United States.

Wellcom’s net revenue in the first half of this year came to AU$58.9 million, up 13 percent on-year, while its net profit jumped 10.7 percent to AU$6.6 billion.

Innocean, founded in 2005 and listed on Korea’s main bourse Kospi in 2015, is part of family-owned conglomerate Hyundai Motor Group. Innocean’s largest shareholder is its Executive Director Chung Sung-yi, Hyundai Motor Chairman Chung Mong-koo’s eldest daughter.

In 2018, Innocean’s net profit rose 22.1 percent on-year to 92.4 billion won ($77.6 million), while its operating profit soared 22.2 percent on-year to 118.2 billion won. Innocean owns overseas entities in 15 countries, including India, Germany, Russia, China and the United States.

By Son Ji-hyoung (consnow@heraldcorp.com)

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