6 months ago
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A bright idea, a chance meeting at an NFL watch party, followed by year-long talks have culminated in a $115-million buyout of DRT Communications by One Great Studio Company Limited, a listed company which trades as 1GS.
Deal arranger Ryan Strachan said 1GS and DRT were simply a good fit.
“Sometimes it’s just about having an idea in your head of what would go well together, and hope that the business owners would see similarly,” Strachan said. “And that’s really how it came together.”
CEO of 1GS Djuvane Browne said the buyout of the assets of DRT Communications positions 1GS to offer a full suite of services, blending technology, creative storytelling, and real-time media intelligence.
It’s 1GS’s second acquisition since its listing on the junior market in 2023.
“We like PR, and we like media monitoring. We think those are two things that have a high impact on businesses in the Caribbean. For us, it’s all about building capacity and building into the future agency that we see,” Browne explained.
DRT Communications has been in operation since 2008. The ‘DRT’ is short for the name of the founder, Danielle Ruth Terrelonge.
With the acquisition, DRT will be absorbed into the operations of 1GS, becoming a division within that company, Terrelonge said. It has been her desire to list DRT, and now the company has found its way to the stock market, albeit indirectly.
All 19 staff at DRT will now work for 1GS, with Terrelonge holding the position of head of marketing communications, PR, strategic communications and media monitoring.
“I see us joining with a company that has a shared mission, a shared vision and a shared value. You can grow alone, or you can grow together; and when Ryan brought the opportunity to me, I saw great synergies. I saw a tremendous opportunity for us to grow together when we looked at the vision of Caribbean expansion,” said Terrelonge, who has operated DRT for 17 years.
After raising more than $330 million from its IPO, 1GS had cleared most of its debts, leaving its balance sheet largely unencumbered and cash on hand to do the deal, said Browne. The company currently holds more than $240 million in cash and short-term investments.
Performance-based payment
Browne says the DRT deal is structured such that there is an upfront payment of $80 million. The balance of $35 million is to be earned out over three years, based on the performance of the business line.
“So, if the business line does well, the shareholders get more. If the business line doesn’t do as well, then the previous shareholders, the DRT shareholders, get less,” Browne told the Financial Gleaner.
“We’ve done acquisitions in the past, and it’s a part of how we structured this to ensure that we had a win-win for everybody,” he added.
Shortly after its listing in September 2023, 1GS announced the acquisition of High Voltage Digital LLC, a US-based search engine optimisation operation. Through the acquired agency, 1GS offers digital marketing services to a pool of local and international clients.
Last year, 1GS also expanded further with the addition of a video production unit, in order to expand its revenue base. DRT serves to further broaden that base.
The marketing company’s year-end results are pending, but over nine months ending September 2024, its revenue amounted to $261.45 million – a big fall-off from $361.84 million for the similar period in 2023. Net profit was spliced from $77 million to $30.6 million.
Deal arranger Strachan, CEO of Sweat Equity Holdings, says the acquisition strengthens 1GS’s market presence across the Caribbean, positioning it as a full-service agency with expertise in digital marketing, public relations, and media monitoring.
“You can’t maintain success in a business like 1GS without diversification to a number of lines of business that can drive growth,” he said.
“The truth is, DRT has a unique value proposition, more than just how it skilfully handled (communications for) IPOs in the past and PR campaigns for large entities. It has a media monitoring arm that’s somewhat unique, and I think there is a lot of upside,” Strachan added.
DRT has done work with some of the largest brands in Jamaica, inclusive of financial institutions, FMCGs, or fast moving consumer goods suppliers, and utility providers, he said.
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