Archive for February, 2012
The management teams from Inuvo and Vertro issued press releases earlier this week indicating that the record date (Janaury 27, 2012) had been set and that each company will hold its respective special meeting of shareholders to vote on the merger. As participants of the GrooveVC community are likely aware, we are very much in favor of this merger and want to encourage everyone to vote. A failure to vote is counted as a “no” and we want to be sure that we get enough votes to approve the deal. Due to management’s focus on getting the deal closed and SEC limitations related to the merger, there has been little PR activity over the last few weeks. However, with Monday’s release there was several good points presented making the case for a combined company that will be much stronger than either Vertro or Inuvo independently –
1) The inclusion of the BargainMatch® application within the ALOT Appbar will be expected to provide a new revenue stream for the combined company while offering enhanced consumer value, promoting greater user life time value. The inclusion of the Kowabunga® daily deals application within the ALOT Appbar could have a similar impact. A key concept will be to market Inuvo owned and operated applications to ALOT’s existing install base.
2) Increased investment in the Inuvo publisher network should provide the combined company the opportunity to strengthen the strategic relationships that generate a majority of Inuvo’s Internet traffic. Additionally, these same publisher relationships offer the promise of new revenue streams as the combined company expands the types of media available to existing publishers.
3) Content available today on the BargainMatch, Yellowise® and Kowabunga websites is expected to be re-purposed to create an improved user experience for the ALOT install base via the ALOT home page and, as a result, the combined company would be able to explore additional monetization options and other direct and/or indirect advertising relationships the combined company retains.
4) The companies have many overlapping operating, public company and third-party expenses that, once eliminated, would be expected to have a positive material impact on EBITDA and free cash flow of the combined company. The combined company is expected to achieve greater than $2.4M annually in savings from elimination of such overlapping costs, which will begin to impact operations shortly after the close of the transaction.
We believe that the current trading range of both Vertro and Inuvo shares do not reflect the assets or potential growth prospects of either business.