The new entity brings together two of the three biggest players in the European digital sports market to create the number one company in this field. Following completion of the transaction expected by 31 December 2001, Chrysalis and 365 will both retain significant but non-controlling minority interests in Newco.
Operating funds of £2.0m will be jointly provided to Newco by Chrysalis (£1.3m) and 365 (£0.7m) and is considered sufficient to support Newco’s operations for the next eighteen months. In addition, Chrysalis and 365 will each make available a further £0.25m to Newco for future acquisitions. Neither Chrysalis nor 365 will have further funding obligations to Newco beyond these investments.
It is intended that the shareholdings in Newco will be as follows: Chrysalis 40%, 365 40% and Newco Management 20%. Chrysalis and 365 will each appoint two non-executive directors to the Board of Newco but neither party will have any operational involvement going forward. Richard Pembroke, currently Managing Director of 365’s internet division, will become Managing Director of Newco, and Marcus Leaver, presently CEO of Rivals, non-executive Chairman.
Newco will combine 365’s digital sports content and market-leading products including Football365, Planet Rugby, Cricket365 and Planet-F1 with Rivals, Chrysalis’ internet content business, which operates Europe’s largest network of independent fan-driven sports web sites. 365’s websites currently attract over two million users a month and the Rivals network has over one million users each month and 47.8 million page impressions per month and has been in existence for just over a year. It is the stickiest sports site in Europe with users spending an average of 37 mins 41 secs on the site.
The merged business will provide its 3 million plus users with access to its broad, fan-based sports network, which will be supporting and complementing 365’s flagship titles in the major sports arenas. Senior management of Newco is confident that this is a package which offers users an unparalleled service, and commercial partners a unique and exciting environment.
Commenting on the announcement Richard Huntingford, Group CEO of Chrysalis, said:
As we said in our preliminary results announced last week, Rivals.net has built up a huge audience over the last 12 months and is now making good progress in converting that audience into revenue. It has always been our intention to further develop the business with a partner and Rivals and 365 together will create a formidable sports internet business.
All of Chrysalis’ funding commitment to the joint venture is contained within the remaining ring fenced New Media fund. Following completion of this transaction Chrysalis’ sole New Media investment will be its 40% minority stake in this joint venture.
Martin Turner, CEO of 365, said:
The Board of 365 believes that the formation of Newco with Chrysalis represents the best opportunity to create Europe’s leading sports internet business, and future value can be created in the entrepreneurial and focused environment of Newco.
Following completion of this merger, we will continue to focus our efforts on developing our telecommunication assets and technology, particularly in the fast-growth area of Voice Services where 365 is a leading player in the UK market.
