Reverse Takeover

RNS Number:0936Q
IBNet PLC
24 September 2003


PRESS RELEASE
                                                               24 September 2003



    Proposed acquisition by IBNet plc of the entire issued share capital of
                  The Deal Group Limited in a reverse takeover

          Placing of 51,319,648 new Ordinary Shares at 3.41p per share

                  Company name change to Deal Group Media plc


IBNet plc ("the Company"), the search engine marketing and internet intelligence
company, has conditionally agreed to acquire the entire issued share capital of
The Deal Group Limited ("dealgroupmedia") by way of a reverse takeover.  The
acquisition will be satisfied by the issue of 205,221,335 consideration shares,
which, at a Placing Price of 3.41p, represents #7 million.  It is proposed that
the Company changes it name to Deal Group Media plc following an EGM to be held
on 17 October 2003.

dealgroupmedia is a provider of performance based on-line advertising which
focuses on maximising the return on clients' advertising spend.  Since its
launch in early 1999, dealgroupmedia has worked with some of Europe's biggest
on-line media planning and buying agencies, on-line brands, websites and
portals.  In the year to 31 May 2003, its turnover was #7.4 million on which it
made a pre-tax profit of #583,000.

In order to provide additional working capital for the further development of
the enlarged group, IBNet also proposes to raise approximately #1.2 million, net
of expenses, by issuing 51,319,648 Placing Shares at 3.41p per share.

The acquisition constitutes a reverse takeover pursuant to the AIM Rules and is
therefore subject to shareholder approval which will be sought at the EGM.
Application has been made to the London Stock Exchange for admission to trading
on AIM of the Existing Ordinary Shares and the New Ordinary Shares.  Admission
is conditional, inter alia, on the passing of certain Resolutions at the EGM.

Adrian Moss, currently founder and CEO of dealgroupmedia and who will become CEO
of the enlarged group on completion, said:

"This transaction will enhance dealgroupmedia's established position as a
leader in performance based online marketing that focuses on delivering more
return on investment (ROI) for advertisers' marketing budgets.  The enlarged
group will offer a comprehensive range of Internet marketing products and
services to its combined client base and will be the first UK supplier of ROI
based online marketing solutions that also offers search marketing and Internet
intelligence services.

"Both our companies already share similar client bases with some customer
overlap and many have indicated that they would be in favour of a one-stop-shop
online marketing offering.  Combining the companies will provide a number of
opportunities to add more value for our clients in addition to commercial
synergies.  The industry is likely to undergo further consolidation and the new
Board will continue to look for opportunities."

Toby Smallpeice, CEO of IBNet, said:

"The reverse takeover is fully supported by the Board and we believe that it is
in the best interests of shareholders.  Our companies have complementary product
ranges and combining them will give real advantages over competitors.
dealgroupmedia is highly regarded within the industry, the management has a
proven track record, and it is already profitable, having grown quickly since it
was founded in 1999.  The funds raised as part of this reverse takeover will be
used to enable the development of new products and services, and help drive the
enlarged group forward."

Further details concerning the background to and reasons for the acquisition,
details on the two companies, the proposed board of directors and the Placing,
Admission to AIM and capital reorganisation are set out below.



For further information, please contact:

Enquiries:

The Deal Group Limited
Adrian Moss, Chief Executive Officer                 + 44 (0) 20  7691 1880
[e-mail]                            www.dealgroupmedia.com

IBNet plc
Toby Smallpeice, Chief Executive Officer             + 44 (0) 20 8987 6700
[e-mail]                               www.ibnetplc.com

KBC Peel Hunt Ltd
Capel Irwin                                          + 44 (0) 20 7418 8900
[e-mail]                          www.kbcpeelhunt.com


Media enquiries:

Bankside Consultants Limited                         Tel: [phone]
Ariane Vacher / Julian Bosdet
[e-mail]                           www.bankside.com




The following information has been extracted without material adjustment from
the circular to be sent to IBNet plc's shareholders dated today, 24 September
2003:



INTRODUCTION

Background to and reasons for the Acquisition

Since the Company was admitted to AIM in March 2000, the Board has evaluated a
number of acquisition proposals. After careful consideration and due diligence
the Board believes that the Acquisition is in the best interests of
Shareholders.

The Directors and the Proposed Directors believe that the Acquisition will
enhance the current IBNet client offerings by providing complementary online
advertising services. The Enlarged Group will offer a comprehensive range of
Internet marketing services.

The Board believes that the executive management team of The Deal Group Limited
("The Deal Group") has a proven track record that will enable them to add value
to, and grow, the business of the Enlarged Group. The Board also believes that
the Proposed Directors have a complementary range of skills which will further
benefit the Enlarged Group.


INFORMATION ON IBNET

Background

IBNet's range of services provides companies with intelligence on how their
intellectual property and branding are represented on the Internet. The Company
monitors for instances of piracy, intellectual property abuse, financial
deception, brand defamation, share ramping and libel of its clients' presence on
the web, representing some well known brands including Nestle, Boots and GSK.
IBNet has two main search engine marketing divisions, Webgravity, which focuses
on the UK corporate marketplace and Webwurld, which targets small to medium
sized companies across Europe.

Webgravity

In January 2002, IBNet acquired Webgravity Limited, a UK based search engine
marketing consultancy.  Webgravity specialises in bespoke search marketing
solutions that are designed to increase online visibility and drive new business
to its customers' websites. Webgravity represents a number of well known brands.

Webwurld

Webwurld.com is a European search engine marketing portal which offers self
service search marketing products to small and medium sized enterprises.
Webwurld has partnered with some of the world's largest search engines to offer
an inclusion service into their search results. Webwurld is available in
English, German, French, Spanish and Italian.

Trading record

The financial information relating to IBNet set out below has been extracted
from the comparative table
                                                             Year to        9 months to            Year to
                                                        30 June 2001      31 March 2002      31 March 2003
                                                               #'000              #'000              #'000

Turnover                                                         402              1,188              1,881
Gross profit                                                     354                988              1,301
Other administrative expenses                                (3,008)            (2,125)            (1,673)
Depreciation                                                       -              (149)              (226)
Operating loss before adjustment 1                          (24,630)            (1,488)            (1,536)
Operating loss after adjustment 2                            (2,654)            (1,286)              (598)
Net cash/(debt)                                                2,041              (870)              (620)


Note:

1. The loss for the year ended 30 June 2001 includes impairment
write-offs, following the group restructuring, totalling #22.5 million,
consisting of an investment impairment of #21.9 million and an intercompany
debtor write down of #564,000.

2. Operating loss after adjustment is shown before write downs (see note
1), exceptional items and amortisation of investments.



INFORMATION ON THE DEAL GROUP

Background

The on-line advertising market

Online advertising involves using electronic banners on host websites which,
when clicked, take web users directly into relevant sections of advertiser
websites.  Advertisers can pay host websites and/or advertising agencies on the
basis of space utilised and the quantity of impressions delivered - a payment
basis that is called CPM (cost per thousand impressions).

A further model is where media owners and advertising agencies were paid only
when end-users performed specified actions on retailer websites. This model is
called CPA (cost per action) and, by using this model, advertisers can
demonstrate a direct return on their investment in on-line advertising spend.

The Deal Group

The Deal Group entered the on-line advertising market in 2000 focusing on
maximising the return on clients' advertising spend. From initially placing
advertising through the single UK channel of affiliate marketing via
www.ukaffiliates.com, The Deal Group has established additional channels to
access potential online customers by offering a comprehensive range of pricing
models. The Deal Group has created long term working relationships with a number
of large and varied media owners developing distinct online routes to its
clients' potential on-line consumers.

The Deal Group has established a profitable operation in Spain, and has more
recently established an operation in Australia.

Services

The Deal Group focuses on the delivery of return on investment from on-line
advertising budgets which involves assisting clients to formulate on-line
advertising strategies. Its services also include advising on:

*  media planning and buying;
*  routes to customer acquisition;
*  creation of efficient sales routes;
*  appropriate on-line offerings;
*  customer valuation;
*  customer relationship management; and
*  the use of parallel promotions.


The Deal Group delivers results using a combination of some or all of the
following marketing channels:

*  Affliate marketing (via www.ukaffiliates.com) which provides a route
   and technical infrastructure for advertisers to interact with a network of
   content-rich niche web sites (affiliates). Significant economies are afforded 
   to both advertisers and participating website owners via the 
   www.ukaffiliates.com website.
*  Affinity marketing which provides a route and technical infrastructure
   for advertisers to interact with a network of medium sized web sites and 
   small consumer portals.
*  Large consumer portals.
*  E-mail marketing.
*  Creation of beneficial business development relationships.
*  Its own sites www.thedeal.net and www.cheekymonkey.com.


The Deal Group's software provides near real time tracking and analysis of
advertisers' on-line marketing campaigns to identify potential improvements and
facilitate ongoing optimisation of on-line advertising campaigns. The Deal Group
tracks the results of advertising campaigns by monitoring consumers' activity on
advertisers' web sites, after seeing or clicking on an advertiser's banner.

The Deal Group's software includes a centralised administration system for
delivering, tracking and optimising clients' advertising campaigns.

Trading record

The financial information relating to The Deal Group set out below has been
extracted from the accountants' report set out in Part III and should only be
read in conjunction with the full text set out therein.

                                                             Year to            Year to            Year to
                                                         31 May 2001        31 May 2002        31 May 2003
                                                               #'000              #'000              #'000

Turnover                                                         724              3,499              7,392
Gross profit                                                     417              1,373              2,509
Operating profit/(loss)                                        (879)                 62                583
Net cash/(debt)                                                 (29)                213                359



PRINCIPAL TERMS OF THE ACQUISITION

Pursuant to the terms of the Acquisition Agreement, the Company has
conditionally agreed, subject to, inter alia, Shareholder approval and
Admission, to acquire the entire issued share capital of The Deal Group from the
Vendors.

In consideration for the sale of the shares in The Deal Group to the Company,
the Company will issue 205,221,335 Ordinary Shares to the Vendors. Under the
terms of the Acquisition Agreement, certain of the Vendors have agreed that in
respect of the Consideration Shares received by them, they will not sell or
otherwise dispose of any interest in them as further set out below under the
heading "Orderly marketing arrangements".



CURRENT TRADING AND PROSPECTS FOR THE ENLARGED GROUP

Current trading

IBNet

Since the Company's year ended 31 March 2003, the launch of the Company's new
automated traffic management tool for performance based search engines at
Internet World has contributed to a number of significant contract wins. This
new service demonstrates the Company's strategy to widen its product base from
pure search engine optimisation to other forms of on-line performance based
marketing.

The Directors have continued their review of potential businesses for the
Company to acquire, which has resulted in the announcement today of the
Acquisition, and they believe the prospects for the Enlarged Group are positive.

The Deal Group

The Deal Group's revenues have grown since its year ended 31 May 2003.  In June
2003 The Deal Group launched a new premium inventory product which has generated
additional revenues.

Strategy and prospects

The Proposed Board intends to continue the Company's strategy to expand its
product range of on-line marketing services to service a larger proportion of
its clients' on-line advertising requirements. In order to achieve this, the
Proposed Board intends to investigate and, if appropriate, expand the overseas
area of operation to increase the Enlarged Group's market exposure and to
develop, as required, new products and services within the on-line return on
investment based advertising market.

The Proposed Board will continue to review potential business acquisitions, as
it believes that there may be significant opportunities within its market sector
to continue to expand its operations. The Proposed Board believes there is
potential for further on-line advertising growth as the number of Internet users
continues to increase.



THE PROPOSED BOARD, MANAGEMENT AND EMPLOYEES

The Proposed Board

On Admission, the Proposed Board of the Enlarged Group will consist of two
executive directors and three non-executive directors. Craig Lister, Richard
Saul and Michael Bull will resign from the Board on Admission. The Proposed
Board will therefore be as follows:

David Lees, Non Executive Chairman, aged 56

David qualified as a chartered accountant in Australia. From 1987 to 1994 he was
finance director of Medeva plc. His responsibilities extended to the completion
of a number of substantial acquisitions. Between 1995 and 1999 he was a
non-executive founding director of SkyePharma plc and chief executive of Flare
Group plc. He is currently chairman of Names.co Internet plc, Xecutiveresearch
Group plc, Network

Estates Limited and Metis Biotechnologies plc.

Adrian Moss, ACA, Chief Executive Officer, aged 32

Adrian qualified as a chartered accountant with Price Waterhouse in 1996. After
a period in corporate finance he took a position as head of strategy and
securitisation for I Group Limited with responsibility for group budgeting,
negotiating funding lines and managing the execution of securitisation mortgage
receivables. In 1999 he founded The Deal Group and has developed the business as
chief executive officer.

Toby Smallpeice, Business Development Director, aged 31

Toby's background is in Internet, telecom and e-business, working in senior
business development roles in Dione Development and Demon Internet where he was
involved in product development and acquisitions. Toby subsequently managed two
acquisitions of small European telecom companies for Bell Atlantic. In 1999 he
founded Webgravity with Richard Saul and in 2001 he joined the Company as chief
executive officer after its acquisition of Webgravity Limited.

Keith Lassman, LLB, MSI, Non Executive Director, aged 45

Keith qualified as a solicitor in 1983 and is now a senior partner in the
corporate finance department of Howard Kennedy, solicitors. Keith brings
considerable experience to the Proposed Board in a broad range of corporate
finance transactions including acquisitions, disposals and capital raising. He
is also a non-executive director of Longbridge International plc and The Wigmore
Group plc (companies whose shares are traded on AIM), deputy chairman of the EIS
Association and a member of the Securities Institute.

Dominic Trigg, Non Executive Director, aged 35

Dominic has a background in traditional and on-line media advertising. He is
currently director of advertising operations (Europe) for Yahoo! Inc. Before
this, he was media director at Music Choice Europe plc, and advertising director
at MSN, Hotmail, Expedia and BT Internet. He gained traditional media experience
as advertising manager for Focus magazine and BBC Worldwide.

Management and employees

The following individuals will have a significant senior management role in the
operation of the Enlarged Group:

Adam Black, Brand and Communications director, aged 33

Adam is a consultant to The Deal Group and will be responsible for marketing,
managing public relations initiatives and brand-related issues for the Enlarged
Group. He has been with The Deal Group for four years.  Prior to this he spent
seven years in journalism, public relations and marketing consultancy for a
number of well known companies in the UK, including Loaded magazine, IPC media,
Lynne Franks PR and Freud Communications.

George Odysseos, ACA, Financial Controller, aged 32

George, a chartered accountant, joined The Deal Group in April 2000 from BDO
Stoy Hayward where he qualified as a chartered accountant. George has been
responsible for setting up and managing the finance function at The Deal Group
and will be the financial controller for the Enlarged Group.

Tony Stubbings, Chief Technical Officer, aged 36

Tony joined The Deal Group in April 2000, previously working in systems
integration and maintenance and multimedia design and network maintenance
projects. Tony will be responsible for the Enlarged Group's internal system
development and maintenance, platform design and development, client support and
product research and development.

Nicky Iapino, Chief Operating Officer, aged *

Nicky joined The Deal Group in September 2003 as chief operating officer. She
moved to The Deal Group having spent three years building Commission Junction's
UK and Ireland operation and has significant sales, marketing and operational
management experience. She was previously sales manager of UKaffiliates.

IBNet currently employs 25 people based in London and The Deal Group currently
employs 40 people of which 31 are based in London, 5 are in Spain and 4 are in
Australia.

Share Options

Key employees of the Enlarged Group will be offered the opportunity to
participate in the future success of the Enlarged Group through the adoption of
a proposed new IBNet share option scheme. Current employees of The Deal Group
holding options over shares in The Deal Group will be offered the opportunity to
be granted new options over shares in IBNet in place of existing options over
shares in The Deal Group. It is not anticipated that any options granted by the
Company will exceed in aggregate 10 per cent. of the issued share capital of the
Company at any one time.

Corporate governance

The Proposed Board recognises the value of the Combined Code and they will take
appropriate measures to ensure that the Enlarged Group complies with the
Combined Code, where appropriate for a public company of its size.

The Company has established an audit committee and a remuneration committee,
which will continue to operate following Admission, with formally delegated
duties and responsibilities. Both of these committees consist of at least two
non-executive directors, where possible, and following Admission will be chaired
by David Lees and Keith Lassman respectively and will meet at least twice a
year.

The audit committee will, inter alia, determine the terms of engagement of the
Enlarged Group's auditors and will determine, in consultation with the auditors,
the scope of the audit. It will receive and review reports from management and
the Enlarged Group's auditors relating to the interim and annual accounts and
the accounting and internal control systems in use throughout the Enlarged
Group. The audit committee will have unrestricted access to the Enlarged Group's
auditors.

The remuneration committee will, inter alia, review the scale and structure of
the executive directors' remuneration and the terms of their service contracts,
including share option schemes. The remuneration and the terms and conditions of
the non-executive directors will be set by the board of the Enlarged Group from
time to time.

The Company has adopted the Model Code for companies, as defined under the
listing rules of the UK Listing Authority, governing directors' share dealings
and will take proper steps to ensure compliance by the board of the Enlarged
Group from time to time.



THE PLACING, ADMISSION TO AIM AND CAPITAL REORGANISATION

Details of the Placing

The Company proposes to raise up to approximately #1.2 million (net of expenses)
by issuing 51,319,648 Placing Shares at 3.41p per share. The net cash proceeds
from the Placing will provide additional working capital for the Enlarged Group
and will fund the costs relating to the Acquisition and Admission of the
Enlarged Group.

It is expected that the proceeds of the Placing will be received by 20 October
2003. In the case of placees requesting Placing Shares in uncertificated form it
is expected that the appropriate CREST accounts of placees will be credited with
the Placing Shares comprising their Placing participation on 20 October 2003.
In the case of placees requesting Placing Shares in certificated form, it is
expected that certificates in respect of the Placing Shares will be despatched
by post within seven days of Admission.

Dealing arrangements

Application has been made for the Enlarged Issued Share Capital to be admitted
to trading on AIM. It is expected that Admission to trading on AIM will become
effective and that dealings in the Enlarged Issued Share Capital will commence
on 20 October 2003. The New Ordinary Shares will rank pari passu in all respects
with the Existing Ordinary Shares.

Orderly marketing arrangements

Each member of the Proposed Board who owns or, will on Admission, own Ordinary
Shares has agreed that, under the terms of the Placing Agreement, he will not
sell or otherwise dispose of any interest in the share capital of the Enlarged
Group for a period of 12 months from Admission, other than in certain specified
circumstances.

In addition, certain of the Vendors (other than members of the Proposed Board)
have agreed that, in respect of the Consideration Shares received by them, they
will not sell or otherwise dispose of any interest in them for a period of
between three and six months from Admission, other than in certain specified
circumstances.



CREST

The Ordinary Shares are eligible for CREST settlement. Accordingly, settlement
of transactions in the Existing Ordinary Shares and the New Ordinary Shares
following Admission may take place within the CREST system if the relevant
shareholder so wishes. CREST is a voluntary system and shareholders who wish to
receive and retain share certificates will be able to do so.

Dividend policy

It is the intention of the Proposed Board to review the Company's dividend
policy in light of the Enlarged Group's financial progress and the availability
of distributable reserves. The Company is currently unable to pay dividends due
to the deficit on its profit and loss account. The Company is therefore
proposing the Capital Reorganisation so that the Proposed Board is in a position
to pay dividends when it believes it is prudent to do so.

Capital reorganisation

The Company is currently unable to pay any dividends as a result of the deficit
which exists on its profit and loss account. Accordingly it is proposed that the
deficit on the profit and loss account will be eliminated by the following:

Purchase and cancellation of the Deferred Shares

The Company completed a capital reorganisation in January 2002, splitting each
of the Company's then issued ordinary shares of 25p each into one 1p Ordinary
Shares and one 24p Deferred Share. As set out in the related circular to
Shareholders dated 13 December 2001, the Company now intends, subject to
Shareholder approval, to purchase the 54,952,000 Deferred Shares, out of the
Placing proceeds, for an aggregate consideration of 1p and cancel them, thereby
reducing the aggregate nominal value of shares then in issue by #13.2 million
such amount being transferred to a capital redemption account.

Capital reduction

As the Company does not have sufficient distributable reserves to currently pay
a dividend, it is proposed to create the necessary reserves after the Deferred
Shares have been bought back by cancelling the Company's share premium and
capital redemption accounts. Following Admission and the issue of the New
Ordinary Shares and after the Deferred Shares have been purchased by the
Company, the amount standing to the credit of the capital redemption account
will be #13.2 and the amount standing to the credit of the share premium account
will be #19.8. The Company's current deficit on its profit and loss account is
#28.3. Accordingly, the Company intends to apply to the Court to cancel its
share premium and capital redemption account. This requires the approval of
Shareholders by special resolution which will be sought at the EGM. The
cancellation of capital will also require the sanction of the Court. Prior to
confirming this, the Court will need to be satisfied that the interests of the
Company's creditors will not be prejudiced, and the Company will put into place
such creditor protections as the Court may require.

Subject to Shareholder approval and the sanction of the Court, the amount of the
cancellation will then be used to eliminate the Company's deficit on its profit
and loss account, with the excess amount being used to create distributable
reserves of #4.7 million.

Capitalisation of Loan Stock

The Company currently owes Toby Smallpeice and Richard Saul in aggregate
#931,273 pursuant to the Loan Notes. Toby Smallpeice has agreed to capitalise
#200,000 of the Loan Stock held by him on Admission in exchange for the issue of
5,865,103 New Ordinary Shares at the Placing Price and to be repaid the balance
in equal monthly payments over the next 42 month period commencing 6 months
after Admission.  The Loan Stock held by Richard Saul will be repaid in equal
monthly instalments over the 12 months following Admission.



_____________________________________________________________________

A circular to IBNet shareholders is being posted today regarding the above
proposals and including a notice convening an EGM to be held on 17 October 2003
at 11.15 am to seek shareholder approval. The directors of IBNet and certain
other shareholders have undertaken to vote in favour of the resolutions in
respect of holdings totalling 48,522,912 Existing Ordinary Shares representing
approximately 55.17 per cent of the current issued ordinary share capital of the
Company.

Copies of the circular will be available from the offices of KBC Peel Hunt at
111 Old Broad Street, London EC2N 1PH from today until one month from admission
of the Enlarged Group to AIM.

_____________________________________________________________________



Notes:

The details regarding the Proposed Directors required by the AIM Rules under
paragraph (f) of Schedule 2 are as follows:


Name                              Current Directorships                Past Directorships

Keith Lassman                     Affiliate Marketing Limited          Snugbug Limited
                                  E-mortgages Limited                  Wishinghurst Limited
                                  Finance-direct.com Limited           Downing Classic VCT plc
                                  First National Property              U-Store Limited
                                  Maintenance Limited                  U-Storage Limited
                                  Howard Kennedy (partnership)         United Storage plc
                                  Howard Kennedy Limited
                                  Longbridge International Plc
                                  Thedeal.net Limited
                                  The Deal Group Limited
                                  The EIS Association Limited
                                  Wigmore Group Plc

Adrian Moss                       The Deal Group (Marketing)           None
                                  Limited
                                  E-mortgages Limited
                                  The Deal Group Limited
                                  The Deal Group Media Limited
                                  Deal Group Media S.L.
                                  Deal Group Media Pty Ltd
                                  Matrix Technology S.A.
                                  Metatank Limited
                                  Finance-Direct.com Limited
                                  Affiliate Marketing Limited
                                  Thedeal.net Limited

Dominic Trigg                     The Deal Group Limited               None



                                    - Ends -


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