A huge piece of dating industry consolidation happened today, with MeetMe acquiring Skout for a massive $55m.
The Pennsylvania-based company today announced it has entered a definitive agreement to acquire Skout for $28.5m in cash and 5.37m common shares of MeetMe.
This puts the total value of the deal at $54.6m, based on MeetMe’s closing stock price on 24th June, 2016.
MeetMe plans to close the deal by 1st October 2016, and the company expects Skout to remain a separate standalone brand & mobile app after the acquisition is completed.
Skout’s headquarters will also remain in San Francisco, and MeetMe has extended offers of employment to its staff of around 30.
The founders of Skout, Christian Wiklund and Niklas Lindstrom, have also agreed to assist with the transition for one year after the deal is closed.
Skout was created by the two founders back in 2007, initially as a social network, before the service pivoted to a dating and social discovery platform in 2009 when the team realised 80% of its members were using the site for dating.
After launching its location-based iOS & Android apps in 2009 and 2010, Skout saw strong user growth, raising $22m in funding from prestigious VC firm Andreessen Horowitz in 2012.
– Marc Andreessen (@pmarca) June 27, 2016
Today, the app is live in over 100 countries, has over 3.5m MAUs as of May this year, and has seen 42,000 new registered users added, on average, every day in 2016.
In terms of revenue, Skout hit $23.8m in 2015.
Speaking about the acquisition, MeetMe CEO Geoff Cook said: “We believe this combination provides a pathway to $100 million in revenue in 2018 with adjusted EBITDA margins approaching 45 percent.
“I am thrilled to bring two of the largest mobile apps for meeting and chatting with new people into the same portfolio.
“We share not only the same vision but also many of the same key engagement metrics, including roughly the same number of chats per user per day, as well as a familiar advertising-driven business model.”
MeetMe expects the move to increase both its user base and revenue – estimating its 2016 revenue could hit between $70.5m and $73.5m in 2016, compared to $56.9m in 2015.
It also says Skout could add $7.5m of Adjusted EBITDA, pushing the combined 2016 figure to between $26m and $29m.
Speaking about the deal, MeetMe CFO David Clark said: “We expect the acquisition to close in October of this year and to be accretive to earnings and to generate additional free cash flow for MeetMe in the first twelve months following the closing and beyond.”
In the announcement about the deal, it was also revealed MeetMe Chairman John C. Abbott was resigning from his position.
With the acquisition, CEO Geoff Cook says his vision is to create the largest global service for meeting and chatting with new people.
Part of the attraction of Skout is that it has just a 5% overlap with MeetMe’s monthly active user base, and 80% of its core comes from international markets where MeetMe is underserved, such as Asia.
Read a blog post from Skout’s founders about the acquisition here.