Converge Technology Solutions Announces Acquisition
Converge Technology Solutions Corp. (TSX: CTS) is thrilled to share news of its new agreement with H.I.G. Capital, who will acquire the company in an all-cash transaction. This strategic partnership allows Converge to gain immediate liquidity and positions H.I.G. as a vital ally for advancing the firm's long-term growth strategy.
Key Transaction Details
Under the terms of the acquisition, shareholders will receive C$5.50 per share in cash. This valuation represents a significant premium, approximately 56% and 57% above the stock's closing price and 30-day volume-weighted average price on a specific date prior to the announcement of this transaction.
The Board of Directors at Converge, after extensive discussions and recommendations from its independent directors, unanimously concluded that this acquisition is beneficial for the organization. Furthermore, shareholders holding around 24% of Converge's total outstanding shares have consented to support this transaction.
Strategic Benefits of the Acquisition
Joining forces with H.I.G. Capital allows Converge to become part of Mainline Information Systems, an established IT solutions provider known for its wide range of services, including cybersecurity, hybrid cloud, and digital infrastructure. By aligning with Mainline, Converge aims to broaden its capabilities, providing customers with enhanced offerings that are essential in today's digital landscape.
Greg Berard, CEO of Converge, expressed enthusiasm about this new chapter, highlighting how this partnership will enhance their ability to address customer needs effectively. The solid portfolio of services presented by H.I.G. and Mainline aligns perfectly with the objectives of Converge, ensuring that they can leverage advanced technology solutions.
Expertise and Leadership Integration
Post-acquisition, the management structure will reflect the strengths of both organizations. Greg Berard will continue his role as CEO within the combined entity, while Mainline's President and CEO, Jeff Dobbelaere, will play a crucial leadership role in furthering the company's objectives. This merger is designed to combine their extensive experiences and technological capabilities, creating a powerful player in the IT market.
Projected Financial Outcomes
Converge has plans to release its preliminary quarterly results shortly after the announcement of the acquisition, indicating robust financial performance with expectations for gross profit and Adjusted EBITDA at the higher end of prior estimates. This financial uptrend showcases the strengths of Converge amid the strategic transition.
Why It's a Smart Move for Shareholders
The all-cash transaction offers shareholders immediate liquidity and a clear pathway for growth as the combined resources of Converge and Mainline are expected to enhance market position and extend service capabilities. The acquisition is anticipated to bring immediate value to shareholders while positioning the company for long-term success.
Approval and Next Steps
The integration process will occur through a court-approved statutory plan of arrangement. Shareholder approval is necessary, with voting expectations set for an upcoming special meeting. Additionally, this transaction will be subject to regulatory and customary closing conditions to ensure a smooth transition.
Both companies will continue their operations during the transition period while gearing up for a future marked by expansion and market leadership.
About Converge and H.I.G. Capital
Converge Technology Solutions is committed to reshaping how businesses engage with technology, focusing on outcomes that meet human-centered challenges. Since 2017, they have developed solutions that drive growth and innovation within diverse industries.
H.I.G. Capital is recognized as a significant player in the global investment area, managing a broad portfolio encompassing over 400 companies worldwide. Their expertise in middle-market transactions positions them to provide capital that accelerates growth across various sectors.
Frequently Asked Questions
What is the acquisition deal between Converge and H.I.G. Capital?
The acquisition involves H.I.G. Capital buying Converge for C$5.50 per share in an all-cash transaction, benefiting shareholders and fostering long-term growth.
What benefits does this merger mean for Converge's customers?
The merger with H.I.G. enables access to expanded services and capabilities, particularly in areas like cybersecurity and hybrid cloud solutions, thus better serving Converge's customers.
How will this acquisition impact Converge's share value?
Shareholders will receive a direct cash payment per share that offers substantial premium value compared to previous trading prices, ensuring immediate liquidity and profit.
What are the next steps for the acquisition process?
The acquisition requires shareholder, regulatory, and court approvals, with expectations set for a special meeting to streamline these processes.
Who will lead the combined entity after the acquisition?
Greg Berard will serve as CEO of the combined company while Jeff Dobbelaere will take on the President role, leveraging their combined experience for optimal leadership.
