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Exclusive: ValueFirst Acquires Indyarocks.com

ValueFirst has acquired a majority stake in online social networking site Indyarocks.com, MediaNama had learned from reliable sources. The company’s filings with the Registrar of Companies confirm this:

“- A board resolution dated 18th of January 2012 for a change of the companys registered address points towards the “Acquisition of majority stake by ValueFirst Messaging”, and that the registered office is being changed to “bring about efficiency and economy in the functioning of the Company because the entire operation will be stream lined/merged with operations of ValueFirst Messaging Private Limited at the proposed place.”
– On 30th November 2011, a share purchase was executed between ValueFirst and the founders of Indyarocks
ValueFirst, Jakkampudi Adiseshaih Chowdary, VeEn Promoters Private Limited, Mrs. Rebela Keerthi, Ms. Rebela Prathista, Mrs. Rebela Vijaya, Naga Agrotech Private Limited and Dr. Mohana Velagapudi.

– ValueFirst shall have an option (“Acquisition Option”) to acquire, either directly or through an Affiliate, all or some of the Shares held by the Founders and Other Shareholders (“Exiting Shareholders”) by giving a written notice to each of the Exiting
Shareholders (“Acquisition Notice”). The Acquisition Option may be exercised by ValueFirst upon the earlier of (i) an IPO; (ii) change in control of ValueFirst resulting from a merger or acquisition; (iii) the expiry of a period of 3 (three) years from the Completion Date; or (iv) such time as may be mutually agreed upon between ValueFirst and the Exiting Shareholder.

It is hereby clarified that absence of mutual agreement between ValueFirst and any one or more of the Exiting Shareholders regarding acquisition of Shares as per point (iv) hereinabove shall not prevent ValueFirst from acquiring the Shares of other Exiting Shareholders with whom ValueFirst reaches mutual agreement for sale of Shares.

– In the event one of the Founders is the Exiting Shareholder, the Acquisition Price shall be either of Rs. 34.34 (Rupees thirty four point three four only) per Acquired Share, or the Fair Market Value of the Acquired Shares held by such Exiting Shareholder, whichever is higher.

– In the event one of the Other Shareholders is the Exiting Shareholder, the Acquisition Price shall be either of Rs. 40/- (Rupees forty only) per Acquired Share, or the Fair Market Value of the Acquired Shares held by such Exiting
Shareholder, whichever is higher.”

When contacted, Kalyan Manyam declined to comment on the acquisition, and on whether ValueFirst has acquired a majority stake in Indyarocks or the complete stake. He also declined to comment on the shares acquired, and whether he is still running Indyarocks. Manyam launched a location based services venture Mojostreet, last year.

ValueFirst Founder Vishwadeep Bajaj and COO Kumar Apurva were not available for comment on the acquisition.

The filings suggest that ValueFirst will acquire 42,50,939 (forty two lakhs fifty thousand nine hundred and thirty nine) Equity Shares of Indyarocks. ValueFirst had previously picked up 511,880 shares in Indyarocks at Rs 39.18 (inclusive of the nominal amount of Re 1 per share) on 29th March 2010, for an amount of Rs . At the same price, 4,250,939 shares would cost ValueFirst around Rs 16.65 crore.

Indyarocks Performance

Indyarocks reported a total income of Rs 1.85 crore in FY11, up from Rs 1.05 crore in FY10, while losses increased to Rs 3.32 crore in FY11, up from Rs 2.74 crore in FY10. According to the schedules to the balance sheet, Indyarocks earned Rs 1.22 crore from Google AdSense in FY11, up from Rs 34.54 lakh in FY10.

What’s interesting to note here is that the biggest cost item for the company, even higher than salaries, was SMS – around Rs 95 lakh for FY11, a substantial increase over the Rs 21.51 lakh the company paid for FY10. In comparison, the company’s salary cost was Rs 87.5 lakh in FY11, and Rs 50.83 lakh in FY10. The company still had Rs 82.66 lakh in SMS expense to be “availed in future years”, and while sources have informed MediaNama that the previous deal was for SMS, we haven’t been able to confirm this.

ValueFirst’s Acquisitions

ValueFirst had raised $15M From Headland Asia Ventures, NEA in February last year, and prior to that, $6 million from NEA in 2008. The company has done the following deals in the past:

May 2012: Acquired Way2SMS, a person to person (p2p) online messaging portal for an undisclosed amount in a cash deal.
May 2010: Invested in online social network IndyaRocks
Apr 2010: Acquired SMS Social Network Tagg.in for an undisclosed amount.
Mar 2010: Acquired majority stake in PacketShaper, a telecom products company, for an undisclosed amount. The acquisition brought in capability to do mobile applications, as well as products for Switching, Dialers, IVR, Calling Cards and IP-PBX etc
Oct 2009: Acquired Escorts Group’s VAS Firm CellNext for an undisclosed sum. CellNext operations have been integrated with Valuefirst, and it brought in M-Commerce and Voice application capability.

ValueFirst primarily focuses on the enterprise market, but also has an SMS advertising network SpotOn Media, SMS content publishing venture SmsMeOn, and content alerts Alertrix.

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