Think Partnership Inc. to Complete Merger of Litmus Media, Developer of Real-Time Click Fraud Prevention and Order Abandonment Recovery Technologies
Wednesday February 22, 9:11 am ET
NORTHBROOK, Ill.--(BUSINESS WIRE)--Feb. 22, 2006--CGI Holding Corporation d/b/a Think Partnership Inc. (the "Company")(AMEX:THK - News) today announced that it has entered into an agreement to acquire Litmus Media, Inc., a Missouri corporation ("Litmus"), through a merger, with Litmus becoming a wholly owned subsidiary of the Company following the closing of the merger. Litmus is engaged in the business of offering integrated solutions for performance-based advertising, search marketing and e-retailing industries. The Company had previously announced a Letter of Intent with Litmus Media on Dec. 19, 2005.
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Litmus Media, Inc. has developed and implemented revolutionary patent-pending real-time "in the clickstream" click fraud detection and protection technology. By protecting advertisers on its ValidClick platform from click fraud, click-to-transaction conversion ratios are higher and therefore advertisers can justify paying a higher price per click, which in turn attracts website publishers to Litmus' profitable and rapidly growing ValidClick Network (www.validclick.com). Litmus has also developed and implemented an effective patent-pending abandoned shopping cart recovery technology called Second Bite, which has been demonstrated to increase sales for online retailers (www.litmusmedia.com).
At the closing of the acquisition, the Company will pay to the shareholders of Litmus an aggregate of $6,500,000 in cash and issue to them an aggregate of 3,170,732 shares of the Company's common stock. Further, the shareholders of Litmus may receive earnout payments of up to $19,950,000 in the aggregate based on the aggregate pre-tax earnings of Litmus for the first 12 calendar quarters following the closing. To the extent earned, up to $10,500,000 of the earnout payment will be paid in shares of the Company's common stock valued at the average closing price per share of the 30 trading days prior to issuance and up to $9,450,000 will be paid in cash. In addition, in the event the shareholders of Litmus are entitled to any earnout payments, the Company has agreed to capitalize a bonus pool for the pre-acquisition employees of Litmus in an amount not to exceed $1,050,000. Further, the Company has agreed that at the closing it will issue to certain shareholders of Litmus warrants to purchase an aggregate of 90,000 shares of the Company's common stock, and will establish a pool of warrants to purchase up to 40,000 shares of the Company's common stock to be issued to certain employees of Litmus.
The closing of the merger is subject to a number of closing conditions, including among other things, the Company raising $6,500,000, which will be used to pay the cash portion of the closing consideration. The agreement will terminate if the closing does not occur by March 20, 2006. As a result, there can be no assurances that the Company will be able to complete the acquisition of Litmus in accordance with the terms described herein, if at all.
Based in North Kansas City, Mo., Litmus has built click fraud protected advertising distribution technologies for the performance-based advertising, search marketing, and e-retailing industries. The ValidClick Network serves pay-per-click search advertising, local search advertising, shopping comparison and coupon content to over 1,000 search engines and web directories processing over 75 million searches per month. The company's real-time click fraud prevention technology and local keyword mapping algorithms allow Litmus to secure partnerships with tier-one search engines and paid-content providers, and in turn, allow Litmus to provide higher revenues-per-click to search publishers.
Litmus has also leveraged its proprietary technologies to develop and operate a profitable portfolio of web properties including online yellow page services, leading local city directories, a meta-shopping search engine, product/coupon search sites, and an affinity-based web search engine. In the merchant solutions arena, Litmus provides merchants with a unique patent-pending order abandonment recovery technology, called Second Bite, and coupon/product feed distribution services, helping online retailers increase ROI with little or no additional investment.
Litmus President and General Counsel Tobias Teeter stated, "This is an exciting time for Think Partnership. The Company will now possess the means for an online advertiser to distribute paid search listings in a click fraud free environment. Meanwhile, our suite of behavioral marketing services leverages and extends the merchant's existing affiliate marketing activities to on-site behavior response. We believe that the cross application of these technologies, along with other recent THK acquisitions, will help redefine Think Partnership."
Litmus Chief Executive Officer John Linden stated, "We are really excited to complete the merger with Think Partnership. We have begun working with some of the other THK companies and we expect that our ValidClick Search Network and click fraud prevention technologies will immediately integrate well, accelerating our business model and strengthening the overall services THK can offer its clients."
Both Teeter and Linden will continue to run Litmus Media after the closing as General Counsel and CEO, respectively.
Think Partnership CEO Gerard M. Jacobs stated, "This transaction is the first of four pending acquisitions which we expect to close soon. Toby Teeter, John Linden and their team at Litmus Media will play a major role in the growth of Think Partnership."
Scott P. Mitchell, president of Think Partnership, stated, "The impact Litmus Media's click-fraud protection will have on Think Partnership cannot be overstated. As performance based online marketing has become a more predicable and reliable way for businesses to advertise, click-fraud has continued to plague legitimate online channels and span far beyond just search and affiliate marketing. One key way for us to continue to maximize the return on investment for our online advertising clients is to minimize or eliminate their exposure to click fraud, thereby further differentiating our services in an otherwise increasingly commoditized marketplace. Further, the ValidClick Search Network provides Think Partnership with a rapidly growing, click-fraud free distribution channel for our clients. Finally, Litmus' local keyword mapping and Second Bite technologies offer new and innovative ways to further maximize the return on investment for our online advertising clients."
CGI Holding Corporation has been doing business under the name "Think Partnership Inc." and will seek formal shareholder approval to change its legal name to Think Partnership Inc. The Company is based in Northbrook, Ill. and currently has 12 operating companies providing online and off-line marketing, advertising, public relations, branding, and shopping evaluation services; search engine optimization and marketing services, opt-in email marketing, and pay-per-click campaign management; online dating; web design, custom web-based applications, database systems, managed and shared hosting solutions, e-commerce and high-speed business Internet access; software for affiliate marketing and affiliate marketing services; online education; and marketing to expectant parents (see www.thinkpartnership.com). The Company has announced signed letters of intent to acquire: Web Diversity Limited, a London-based leader in paid search management and organic search (see www.webdiversity.co.uk); U.K.-based Crystal Reference Systems Limited, whose operating divisions are Crystal Semantics (see www.crystalsemantics.com), and Crystal Reference (see www.crystalreference.com), an Internet content and search technology company and a major educational content publisher in Europe; and iLead Media, Inc., Pleasant Grove, Utah, a recognized leader in online lead generation (see www.ileadmedia.com).
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