2ergo Sells Out to Eagle Eye for £4.5m

Podifi_Pod_RedemptionMobile marketing firm 2ergo is selling its mobile coupon and loyalty business to Eagle Eye Solutions for £4.5m after failing to successfully commercialise its podifi mobile wallet offering.

The deal is made up of £2.5m in cash and the issuance of £2m of stock in Eagle Eye at the IPO placing price – Eagle Eye is due to float on AIM next month. 2ergo estimates this will equate to around 6 per cent of Eagle Eye’s business on flotation. When the deal goes through, 2ergo will change its name to Broca, and become an investment business, with an initial initial focus on the TMT (Technology, Mobile, Telecoms) sector.

“The management team has worked incredibly hard to continue to prove the value of the technology the company has created,” said Ian Smith, 2ergo’s executive chairman. “The board remains confident that the podifi technology has the ability to be a leading architect of change in the digital coupon and loyalty arena. However, sales traction has continued to be slow and we cannot give our shareholders the certainty they require over the company’s requirements for further funding to develop the opportunity independently. We are optimistic and enthusiastic over the ability of Eagle Eye to combine the two company’s technologies and to leverage its board’s experience in the retail sector to successfully penetrate the market.”

2ergo raised a further £3.1m of funding from shareholders in June 2013 to enable it to focus on commercialising its podifi technology. While revenues have started to flow from the trials and pilots that have been established, the company said that no single contract had given the board sufficient comfort that the revised strategy would allow it to deliver on the promise of the technology in the short term. Furthermore, at the time of the last fundraising, the company’s major shareholders had made it clear to the board that they would not support further capital raisings without material success in commercialising podifi, which has not been forthcoming.