Safeguard Scientifics, Inc. (NYSE:SFE) today announced that it has completed the sale of 39.1% of Safeguard's ownership position in MediaMath Holdings. Inc. to MediaMath for $45.0 million in cash. The repurchase represents the equivalent of an implied cash-on-cash return of 4.5x on Safeguard's 39.1% ownership position in MediaMath, a global advertising and marketing technology leader. In connection with the sale, MediaMath has the right to repurchase an additional 10.9% of Safeguard's ownership position on or before the 180 day anniversary of the initial repurchase for $12.5 million in cash.
"This transaction is a 'win' for both parties," said Brian J. Sisko, Safeguard's President and Chief Executive Officer. "MediaMath has emerged as a leader in the digital marketing category and we're excited to continue our partnership as they continue to build value for their stakeholders. Meanwhile, the sale of a portion of Safeguard's MediaMath position is consistent with Safeguard's new business strategy of pursuing monetization opportunities, produces a significant cash-on-cash return, strengthens our balance sheet, enhances Safeguard's financial flexibility going forward and allows us to continue to participate in the future growth of MediaMath in a significant way. If MediaMath exercises the option to repurchase the additional 10.9% of Safeguard's ownership stake, we will have realized $57.5 million for 50% of our ownership stake in MediaMath," Sisko said.
"Safeguard has been a strong partner to MediaMath," said Franklin Rios, Global Head of Corporate Development for MediaMath. "They share our vision and have believed that MediaMath would rise to the top of the digital marketing category, showing commitment through multiple financing events."
In connection with the transaction, MediaMath and Safeguard have agreed that an independent industry expert to be approved by Safeguard will hold Safeguard's seat on the MediaMath Board of Directors to bolster MediaMath's strong Board of Directors that includes a number of industry leaders. Safeguard will hold a board observer right as well.
Safeguard first deployed capital in MediaMath in 2007. Measured by annual revenue, the business is the largest of Safeguard's portfolio of early-stage companies.
In January 2018, Safeguard began to implement a new business strategy designed to increase shareholder value. Under the new strategy, Safeguard has ceased to deploy capital into new partner companies. Safeguard remains focused on managing and financially supporting existing partner companies, with the goal of pursuing monetization opportunities and maximizing net proceeds distributable to shareholders. Safeguard will consider the sale of individual partner companies, the sale of certain partner company interests in secondary market transactions, or a combination thereof, as well as other opportunities to maximize shareholder value.
About Safeguard Scientifics
Historically, Safeguard Scientifics (NYSE:SFE) has provided capital and relevant expertise to fuel the growth of technology-driven businesses. Safeguard has a distinguished track record of fostering innovation and building market leaders that spans more than six decades. For more information, please visit www.safeguard.com or follow us on Twitter @safeguard.
