TMN, one of the UK’s biggest online direct marketing companies, has made a recommended £9.84 million all-share offer for rival AIM venture Internet Business Group (IBG).

Under the terms of the agreed deal, shareholders in IBG, the online advertising and web-publishing specialist bossed by CEO Maziar Darvish, will receive one new TMN share for every 3.765p IBG shares. The ‘nil premium’ takeover values IBG at £9.84 million, based on the closing prices of the two companies yesterday, being 12.75p for IBG and 48p for TMN, which claims ‘irrevocable undertakings' from just under 49 per cent of IBG shareholders.

Assuming no options in either business are exercised before the deal is rubber-stamped, a maximum of 20.5 million new TMN shares will be issued, leaving IBG investors with 29 per cent of the new, bigger business.

Shares in IBG, 34.25p earlier this year, were pummelled this summer on a shock earnings alert in which management warned annual sales and profits would disappoint. The shortfall reflected its attempt to scale up the fast-growing AffiliateFuture business for the long-term, but came at the expense of short-term sales and hence market forecasts. Subsequent full year results to October, issued today, showed a drop in pre-tax profits from £1.1 million to £922,000.

TMN, worth roughly £25 million at a lowly 49p, offers a range of services including email and website marketing, digital advertising and research analysis. Chief executive Mark Smith is keen on increasing the group’s range of services in online advertising, in order to capture more advertising spend. He sees ‘excellent synergies’ between IBG, whose management will stay in place, and TMN, where recent interims to October revealed pre-tax profits of £1.4 million from sales of £9 million.