A game-changing disposal from a bargain-rated stock

UK advertising and marketing specialist Mission Group (TMG: 27p) has sold its technology-based agency April Six to US-based Marketbridge for a total consideration of up to £17.4mn. The initial £10.5mn cash consideration has been used to slash pro-forma net debt to £6.5mn. A further £4.2mn likely earn-out payment that is scheduled for June 2025 will cut borrowings even more.

It’s a significant transaction as Mission Group’s debt burden has been weighing on the share price, so much so that even after a 12 per cent share price bounce the £24.4mn market capitalisation company is still only rated on a 2025 forward price/earnings (PE) ratio of 4.1 and on three times operating profit estimates of £10.3mn to enterprise valuation.