CGI Holding Company, the parent firm on RTP-based WebSourced, is buying a Florida firm as part of efforts to improve its online personals business.
CGI (OTCBB: CGIH) said Friday that it would acquire WebCapades, which is based in Clearwater, FL, for stock and cash. WebCapades operates several online dating sites.
“WebCapades’ management team has a profound understanding of the on-line dating business,” said Steven Martin, CEO of WebSourced. “They know how to develop and execute sector-dominating marketing plans, and how to handle hyper growth. I expect them to transform our Cherish.com subsidiary. In addition, WebSourced and WebCapades will clearly be able to contribute a great deal to each other; the marketing and cost-savings opportunities are obvious and compelling.”
WebCapades produced revenues of $3.26 million in the first half of 2004 with a pre-tax profit of $1.53 million. CGI said the acquisition should add between 20-25 cents a share to its earnings.
The founders of WebCapades, Scott and Kristi Mitchell, will remain with the company, CGI said.
As part of the deal, Scott Mitchell will also assume the duties of Cherish.com, the only dating and personal service subsidiary of CGI. Mitchell is a former chief technology officer of the Home Shopping Network and Tunes.com.
“We had several companies interested in acquiring our business, because we have a very focused, profit driven entrepreneurial culture,” Mitchell said in a statement. “We chose to merge with CGI in order to accelerate our vision for a broader on-line dating presence under the Cherish brand, and because the WebSourced team is a group of highly motivated winners who think like we do.”
The deal cost CGI $3.5 million in cash, 1.9 million shares of CGI stock, and another $1.2 million in promissory notes. WebCapades are eligible for another $500,000 in incentives.
Gerard M. Jacobs, the CEO, of CGI, said he expected the deal to be a profitable one immediately. “WebCapades is a growing, high margin internet business with operational and technical excellence,” he said. “WebCapades has outstanding management led by Scott and Kristi Mitchell, who have a proven track record of cultivating business concepts into record-breaking profitability. Assuming that WebCapades and our WebSourced subsidiary continue their historical growth trends, and excluding any other transactions, we expect CGI to have between $0.20 and $0.25 in after-tax earnings per share for 2005.”
As part of the deal, CGI issued just over 2 million shares of stock at $2.05 per share to raise capital.