Content aggregator ScreamingMedia
liked the investment tools that it was syndicating for Stockpoint so much, it decided to buy the company in a deal valued at $21.6 million in stock, cash and debt.
When the acquisition closes, the New York based ScreamingMedia will have drilled itself a financial services vertical and boosted its combined annual revenue base to about $38.5 million, counting Stockpoint’s $16.6 million in annual revenues.
It would also boost its average contract value per customer to just under $200,000 as well as the percentage of contract value derived from enterprise customers.
The move buys ScreamingMedia a tidy opportunity to boost its offerings to the financial services industry, a key vertical that savvy Web content companies are targeting while traditional financial data providers figure out how to migrate their closed pipes to open, Web-based platforms.
Whether the merged companies can go head-to-head with investment information and tools provider Multex.com, which makes its bread-and-butter revenues off enterprise customers, is the obvious question.
But at least the Stockpoint purchase helps ScreamingMedia become a contender in the financial services vertical while it looks for a way to stem its losses, which were $4.7 million on revenues of close to $8 million in the first quarter ending in March.
The Coralville, Iowa-based Stockpoint had 183 customers at the end of the first quarter, including Deutsche Bank, Merrill Lynch HSBC Canada, National Discount Brokers, CUNA Mutual and PricewaterhouseCoopers, RW Baird and Thomas Weisel Partners.
Other customers are banks, asset managers, electronic communications networks, 401(k) sponsors, Web portals and media companies.
ScreamingMedia, which had been in the hunt for a merger partner in order to cope with consolidation in Web content syndication, not only gets financial services applications and tools to add to its hosted services, but Stockpoint, which will retain its name under the ScreamingMedia brand, gets ScreamingMedia’s distribution platform to help it sell into even bigger enterprise systems. Both companies hope to play in an even bigger sandbox once they’ve combined their assets.
Stockpoint maintains a New York sales office, which is expected to be folded into the ScreamingMedia headquarters. Corporate executives with Stockpoint are expected to take senior management positions in the acquired company.
Once the deal closes, ScreamingMedia would acquire all outstanding shares of Stockpoint in exchange for about 4.1 million shares of ScreamingMedia stock, which has been in the $2.00 range for weeks now.
The deal includes 350,000 warrants with an exercise price of $6.00 each and $1.1 million in cash for the privately held Stockpoint, which had raised $20 million in private equity funding before the purchase.
ScreamingMedia also said it would retire $6 million of Stockpoint’s existing debt and will offer to repay $5.9 million of Stockpoint’s notes ahead of their due date.
The combined company is expected to have an estimated $80 million to $86 million in cash.
During a conference call Monday, ScreamingMedia’s chairman and CEO Kevin Clark said the combined company will leverage Stockpoint’s mission critical financial content and applications, and ScreamingMedia’s content, technology and professional services.
ScreamingMedia was one of the last Alley dot-coms to go public before the tech wreak hit the Nasdaq in the spring of 2000. Besides Boeing Co, ScreamingMedia customers include AT&T, Vodafone, Bristol Myers-Squibb, and Hewlett-Packard and a host of content-centric Web sites.