MeetMe is set to acquire Skout, both makers of social discovery apps, for $28.5 million in cash and 5.37 million common shares of the former, “to create the largest global service for meeting and chatting with new people”.
This implies an enterprise value of $54.6 million for MeetMe.
The acquisition is expected to provide greater scale for monetisation and increased profitability for the combined company, MeetMe said.
Skout, which will remain a separate brand and standalone app, allows users to meet new people based on their preferences and proximity.
MeetMe explained it will be able to take advantage of Skout’s user base of 3.5 million mobile monthly active users (MAUs) as there is less than a 5 per cent overlap of user base between the two.
What’s more, assuming the deal closes on 1 October, MeetMe expects to post between $70 million and $73.5 million in revenue for 2016.
MeetMe expects the new entity to have a total of 8.5 million mobile MAUs, an increase of 69 per cent from MeetMe’s 5 million MAUs in May 2016, as well as 2.1 million daily active users (DAU) and 5.72 million chats sent per day, with 107,000 new mobile users added daily.
It also hopes the move will provide “significantly increased scale in user base and revenues, and exhibit strong operating leverage.”
According to Geoff Cook, CEO of MeetMe, “We share not only the same vision but also many of the same key engagement metrics… as well as a familiar advertising-driven business model. I am excited by the opportunity to work closely with their talented team to accelerate growth and engagement across both apps around the world.”
He also said the announcement came during a period of strong growth for MeetMe, with May mobile DAUs of 1.24 million, up 8 per cent versus the Q1 average, and believes the acquisition will further build on this momentum, dramatically increasing scale, and enabling continued improvements to MeetMe’s platform.
MeetMe has offered ongoing employment to its staff and its founders Christian Wiklund and Niklas Lindstrom will assist with the transition for one year after the closing.