Pacific Star Network Limited (ASX:PNW) entered into a non-binding term sheet to acquire Crocmedia Pty Ltd from a group of sellers on November 22, 2017. Pacific Star Network Limited signed sale and purchase agreement to acquire Crocmedia Pty Ltd (Crocmedia) from a group of sellers on January 5, 2018. The enterprise value for Crocmedia Pty Ltd is AUD 25 million. In a related transaction, Crocmedia Pty Ltd will acquire remaining 18% stake in Thread Communication Pty Ltd. Pacific Star Network Limited will issue 87.5 million shares and 4.1 million performance rights in consideration for Crocmedia Pty Ltd and Thread Communication Pty Ltd. Pacific Star Network Limited will raise AUD 10 million in cash from the placement of 40 million new shares at AUD 0.25 per share to pay out its existing debt facility and support growth initiatives. Post completion of the merger and placement, current Crocmedia Pty Ltd’s shareholders and executives are expected to own approximately 46.1% of Pacific Star Network Limited. Crocmedia Pty Ltd’s shareholders and executives will enter into a voluntary escrow agreement for 18 months in respect of 100%, and 24 months with respect of 75%, of the consideration after transaction completion. Post completion, Crocmedia Pty Ltd will be merged into Pacific Star Network Limited. If Pacific Star Network Limited breaches its obligation under the agreement, it should pay Crocmedia Pty Ltd for all fees, expenses and costs incurred in connection with the transaction up to AUD 0.25 million. The transaction represents an implied trailing twelve month to October, 2017 EBITDA multiple of 6.4. For the year ending October 31, 2017, Crocmedia Pty Ltd reported revenue of AUD 25.7 million, EBITDA of AUD 3.9 million, EBIT of AUD 3.49 million and net profit after tax of AUD 3.03 million. As of October 31, 2017, Crocmedia Pty Ltd reported total assets of AUD 14.89 million and net assets of AUD 7.26 million. The existing management team of Crocmedia Pty Ltd will remain upon completion. Crocmedia Pty Ltd’s co-founder and current Chief Executive Officer Craig Hutchison will be appointed to Pacific Star Network Limited’s Board as a Director and will be appointed as the Chief Executive Officer and Managing Director of Pacific Star Network Limited. Chris Giannopoulos will be appointed to Pacific Star Network Limited’s Board as Executive Director. Craig Coleman (Chairman), Andrew Moffat (Non-Executive Director) and Colm O’Brien (Non-Executive Director) will remain on Pacific Star Network Limited’s Board. A number of senior executives of Crocmedia Pty Ltd including Chris Giannopoulos, Jodie Simm and Sam Bingley will be appointed in senior roles within the management team of Pacific Star Network Limited. The transaction is subject to Pacific Star Network Limited’s shareholder approval at a general meeting, simultaneous completion of the placement, the acquisition of the minority shareholding in Thread Communication Pty Ltd occurring, certain change of control consents under material contracts, no material adverse change in either Pacific Star Network Limited or Crocmedia Pty Ltd and no warranty breaches, Pacific Star Network Limiteds approves the terms of any contracts currently being negotiated by Crocmedia Pty Ltd, restructuring of employee equity entitlement arrangements and extension, consent or refinance of debt facilities. The transaction has been unanimously approved by the Board of Directors of Pacific Star Network Limited. Leadenhall VRG Pty Ltd, independent expert to Pacific Star Network Limited, considers the transaction to be fair and reasonable to shareholders. As of March 7, 2018, Pacific Star Network Limited’s shareholder meeting will held on March 15, 2018. As of March 15, 2018, Pacific Star Network Limited’s shareholder meeting was held and the transaction has been approved by shareholders of Pacific Star Network. The transaction is expected to complete on March 23, 2018. As of March 7, 2018, transaction is expected to complete by late march 2018. The merger is expected to be approximately 44% earnings per share accretive. Allier Capital Pty Ltd and James Stewart, Natasha Dhillon-Penner, Simon Meagher, Sai Ma, and Tarrant Sewell at Norton Rose Australia acted as financial and legal advisers to Pacific Star Network Limited respectively and Canterbury Partners Pty Ltd and MinterEllison acted as financial and legal advisers to Crocmedia Pty Ltd respectively. Ernst & Young acted as financial due diligence and tax due diligence for Crocmedia Pty Ltd. Richard Norris, Shaun Bettman, Gary Cornelius and Bruce Li of Leadenhall VRG Pty Ltd acted as financial advisors to Pacific Star Network Limited for a fee of AUD 0.06 million. Pacific Star Network Limited (ASX:PNW) completed acquisition of Crocmedia Pty Ltd from a group of sellers on March 29, 2018.