Advantage Solutions completes sale of Jun Group

Rhea-AI Summary

Advantage Solutions Inc. (NASDAQ: ADV) has completed the sale of its digital advertising platform Jun Group to Verve Group SE for approximately $185 million. The company received $130 million in cash at closing, with two additional installments expected over the next 18 months. Advantage plans to use the majority of the initial proceeds to pay down debt and reinvest in the business. The company aims to reduce its net leverage ratio to less than 3.5 times over the long term. CEO Dave Peacock stated that this sale represents a significant step in simplifying Advantage's business portfolio and enabling strategic investments for growth while reducing debt.

Positive

• Received $130 million in cash from the sale of Jun Group
• Total gross proceeds of approximately $185 million expected
• Plans to use majority of proceeds to pay down debt
• Aims to reduce net leverage ratio to less than 3.5 times
• Completes business portfolio simplification

Negative

• Divestiture of a digital advertising platform may impact future revenue streams

Insights

Financial Analyst

The sale of Jun Group by Advantage Solutions (NASDAQ: ADV) for $185 million is a significant move that warrants attention. Here's why this transaction is noteworthy:

• Debt Reduction: With $130 million received upfront, Advantage's plan to use the majority for debt repayment is a prudent financial decision. This aligns with their stated goal of reducing the net leverage ratio to below 3.5%, which could improve their financial health and credit profile.
• Strategic Refocus: By divesting Jun Group, a digital advertising platform, Advantage is streamlining its business portfolio. This move allows the company to concentrate on its core competencies in providing services to retailers and CPG clients, potentially leading to improved operational efficiency and profitability.
• Phased Payment Structure: The additional two installments scheduled at 12 and 18 months post-close provide Advantage with future cash inflows. This structure could offer financial flexibility and support ongoing strategic initiatives.
• Market Reaction: Investors should monitor the stock's performance following this announcement. The market often responds positively to debt reduction efforts and strategic focus, which could potentially boost shareholder value.

While the sale appears positive for Advantage's financial position and strategic direction, it's important to consider the potential loss of revenue and growth opportunities from Jun Group. Investors should keep an eye on how Advantage redeploys the proceeds and executes its refocused strategy in the coming quarters.

Market Research Analyst

The sale of Jun Group by Advantage Solutions to Verve Group SE marks a significant shift in the digital advertising landscape. Let's break down the implications:

• Industry Consolidation: This transaction reflects the ongoing consolidation in the ad-tech sector. As larger players seek to expand their capabilities and market share, we're likely to see more such acquisitions.
• Competitive Dynamics: Verve Group, by acquiring Jun Group, is strengthening its position in the digital advertising market. This could potentially alter the competitive landscape, putting pressure on other mid-sized players to seek strategic partnerships or consider M&A activities.
• Market Trends: The $185 million valuation of Jun Group provides a benchmark for similar ad-tech platforms. It suggests that there's still significant value in specialized digital advertising capabilities, despite challenges like privacy regulations and the phasing out of third-party cookies.
• Strategic Priorities: Advantage's decision to divest Jun Group indicates a shift away from direct involvement in digital advertising technology. This move aligns with a broader trend of companies focusing on their core competencies and divesting non-core assets.

For investors, this transaction underscores the importance of staying attuned to strategic shifts in the rapidly evolving digital advertising ecosystem. It also highlights the potential for value creation through strategic divestitures and the ongoing appetite for ad-tech acquisitions among larger players seeking to enhance their technological capabilities.

ST. LOUIS, July 31, 2024 (GLOBE NEWSWIRE) -- Advantage Solutions Inc. (NASDAQ: ADV), a leading business solutions provider to consumer goods manufacturers and retailers, today announced it has completed the sale of digital advertising platform Jun Group to Verve Group SE, a Swedish digital advertising company formerly known as Media and Games Invest SE.

Gross proceeds from the sale, which was announced in June, are approximately $185 million.

Advantage received approximately $130 million in cash at close. As part of the purchase agreement, Verve Group is slated to pay two additional installments 12 months and 18 months post-close.

Advantage plans to use the majority of initial proceeds to pay down debt and reinvest in the business. The company remains committed to reducing its net leverage ratio over the long-term to less than 3.5 times.

“The sale of Jun Group represents another significant step that will enable Advantage to sharpen our focus on providing industry leading services to our retailer and CPG clients,” said Dave Peacock, CEO of Advantage Solutions. “This largely completes our business portfolio simplification, enabling us to invest strategically into growth while reducing our debt.”

About Advantage Solutions

Advantage Solutions is a leading provider of outsourced sales, experiential and marketing solutions uniquely positioned at the intersection of brands and retailers. Our data- and technology-driven services — which include headquarter sales, retail merchandising, in-store and online sampling, digital commerce, omnichannel marketing, retail media and others — help brands and retailers of all sizes get products into the hands of consumers, wherever they shop. As a trusted partner and problem solver, we help our clients sell more while spending less. Advantage has offices throughout North America and strategic investments in select markets throughout Africa, Asia, Australia, Latin America and Europe through which the company serves the global needs of multinational, regional and local manufacturers. For more information, please visit advantagesolutions.net.

Media:

Peter Frost
press@advantagesolutions.net

Investors:

Ruben Mella
investorrelations@advantagesolutions.net

FAQ

How much did Advantage Solutions (ADV) receive from the sale of Jun Group?

Advantage Solutions received approximately $130 million in cash at the closing of the Jun Group sale, with total gross proceeds expected to be around $185 million.

What is Advantage Solutions (ADV) planning to do with the proceeds from the Jun Group sale?

Advantage Solutions plans to use the majority of the initial proceeds to pay down debt and reinvest in the business.

Who purchased Jun Group from Advantage Solutions (ADV)?

Jun Group was purchased by Verve Group SE, a Swedish digital advertising company formerly known as Media and Games Invest SE.

What is Advantage Solutions' (ADV) target for its net leverage ratio?

Advantage Solutions aims to reduce its net leverage ratio to less than 3.5 times over the long term.