iTouch buys Movilisto for €60m

iTouch, the mobile information services group, has agreed to buy Movilisto, a Spanish and Portuguese provider of text message applications, for up to €60m (£40.7m).

Movilisto was founded two years ago and specialises in premium-rate entertainment content to mobile phones. This includes ring tones and screen savers as well as games, horoscopes, poems and jokes.

Last year the business recorded pre-tax profits of €12.6m on turnover of €30.8m. The business has deals with companies such as Telefonica, Repsol YPF and El Corte Ingles as well as all three mobile network operators in Spain.

ITouch said the deal would increase its revenues and accelerate its move towards profitability. The deal is earnings enhancing immediately.

Ivan Fallon, the chairman, said: "The acquisition of Movilisto is a transformative deal, which will sharply accelerate iTouch's road to profitability. It also establishes the group's position as one of Europe's leading value-added service providers and a key consolidator in the industry."

ITouch will pay an initial €35m for Movilisto, of which €5m will be in cash and €20m in shares. The remaining €10m is dependent on the company's working capital at the time of the deal's completion. A maximum of a further €25m in cash and shares will be paid depending on Movilisto hitting financial targets within two years.

The deal was announced as iTouch reported improved figures for the year to 31 December. Operating losses before exceptionals were cut to £16.2m from £16.8m.

Independent News & Media, the publisher of The Independent and The Independent on Sunday, has a 49.5 per cent stake in iTouch.

Shares in iTouch rose 3 per cent to 16.75p.