Mundo Media is going public.
On Monday, Harmony Merger Corp.(NASDAQ:HRMN) announced that it had entered into a plan of reorganization with Mundo Media. The reorganization will see the latter combine into the former, and the two entities trade as one on NASDAQ under the (for now) ticker HRMN. This maneuver offers Mundo a quick and easy public listing by March. Harmony has picked up a couple of percentage points on the announcement, but for all intents and purposes, markets have pretty much ignored the move. This could be an opportunity to get in at the early stages of what could be one of the most promising newly-public entities this year.
Before we get into why, it is worth noting that Harmony is a shell for the purposes of taking other companies public, and will change its name to New Mundo. The operational aspect of the new entity will be purely a ramped up continuation of Mundo’s current business.
And what is that? Mundo helps brands with data-driven customer acquisition and monetization. For those outside of the industry, this general business description may seem a little bit jargony, but it’s not all that complicated. Through a cloud platform called Mundotrack, it connects advertisers with potential customers online. It does this, much like other advertising networks, though a media network of about 35,000 publishers.
It works like this. A client comes to Mundo and outlines its goals. Mundo feeds these goals to its publisher network, and the network gets to work producing promotional content (native advertising articles, reviews, that sort of thing) and publishing it at a variety of outlets across the internet. Internet users come across, and read, this content, and are redirected towards the advertiser’s website. All of this is tracked via the cloud based platform. The captured users then transact with the advertiser, which is again a tracked process.
The ability to track the progress of a campaign is key to Mundo’s offerings, as it affords the advertiser an opportunity to accurately calculate its return on investment for ad spend with the campaigns it runs through Mundo’s system. Ad-tech companies like Alphabet Inc (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB) offer their own versions of the tracking system incorporated into Mundo’s offerings, but there’s a key difference between Mundo and others, and it’s rooted in promotional concept.
Advertisers wishing to promote via Facebook or Google are generally restricted to text-based advertisements located in the sidebar or a sponsored listing section of the various platforms, an Adsense banner, or any other method than looks foreign to the website itself . There is mounting data that suggests native advertising – that is, promotion through things like articles and more complex media content designed to match the look and feel of the website on which it is being displayed – is far more effective than traditional text based or banner style advertising. In order to successfully implement a campaign that uses native advertising, a large publishing network is required. Mundo has that network. Further, it is generally difficult to track with any accuracy the progress of a campaign spread across a large number of publishing outlets. It is possible, sure, but time-consuming and costly. Mundo’s platform overcomes this issue, allowing advertisers to stay on top of a campaign’s metrics without the time and cost traditionally associated with content network tracking.
The growth of the company speaks for itself. Established in June 2009, Mundo now has 102 employees, and 16,000 campaigns under its belt. During 2016, the company logged more than 85 million conversions, in 182 countries, and across 35,000 unique supply partners. Every month, its content receives 4 billion interactions, and advertisers acquire 17 million users with the Mundotrack platform.
Financials are excellent as well.
Revenues during 2014 came in at $85.6 million, growing to $105.8 million during 2015. 2016 projected revenues come in at $113.1 million (FY financials are yet to be released). Net income 2014 and 2015 hit $4.9 million and $8.8 million respectively, and is expected to reach $11.6 million during 2016. Net income targets for 2017 and 2018 are $15.3 million and $21.5 million respectively.
Looking specifically at the transaction, upon consummation, the current shareholders of Mundo will receive $111.5 million of new company shares, $25 million in cash, and an additional $28.5 million in new company stock spread across the next 24 months based on a predefined net income and stock price targets. The net income targets are as outlined above. The stock price targets are $12 per share at the end of 2017, and $15 per share at the end of 2018.
The names attached to the deal are quite big in the advertising industry. Joel Greenblatt, renowned US hedge fund manager and value investor, serves as Harmony’s Special Advisor. Eric Rosenfeld, retired hedge fund manager and senior lecturer at both MIT and Yale, serves as Chairman and CEO of Harmony. Ross Levinsohn will take up the position of Executive Chairman of the company from his current position as non-Executive Chairman. Levinsohn of course is the ex interim CEO of Yahoo! Inc. (NASDAQ:YHOO), and was for a long time billed as being the number one candidate for taking the helm at Yahoo! on the departure of Melissa Myers. With his position at Mundo now secure, this obviously isn’t going to happen, and Mundo should derive great benefit from having his experience and network associated with its operations.
With Mundo’s current executive staff and growth rate, the company may open itself up for acquisition before the decade is out.
