Blank check company Capitol Acquisition Corp. III will combine with private equity-backed Cision Inc. in a deal that will make the cloud-based media communications software provider a publicly traded company worth roughly $2.4 billion, according to a statement on Monday.
The deal will allow Capitol invest in Cision, which offers a platform for public relations and marketing personnel to create campaigns and then reach the relevant media channels, at a time when the traditional media advertising market is in flux, according to the statement.
"There is a shift in corporate marketing spend to the earned channel driven by its higher [return on investment] and proven success in building brands and the declining efficacy of traditional paid media advertising," Mark Ein, Capitol chairman and CEO, said in the statement. "We are investing in Cision, a market leader, to get behind this large, important trend and position the company for accelerated future growth. We think the combined company will deliver superior returns for investors long into the future."
Capitol and Cision will combine using a contribution and exchange model that will see Cision become a wholly owned subsidiary of Capitol Holdings, which will then be merged into Capitol, according to a statement.
The structure of the deal will allow GTCR, Cision’s private equity backer, and Cision’s management to hold onto 100 percent of their equity in the company, according to a statement. At closing, Cision’s current backers are expected to own 68 percent of the combined company and Capitol will hold 32 percent.
The transaction is expected to create a company with an enterprise value of about $2.4 billion, which would imply a multiple of 10.5 times projected 2017 adjusted earnings before interest, taxes, depreciation and amortization and a multiple of 9.2 times projected 2018 adjusted EBITDA, according to the statement.
As part of the deal, Cision’s stockholders are able to get up to 6 million common shares through an incentive earn out, according to the statement. The incentive earnout will be issued at 2 million shares at a time, when the combined company’s stock price reaches $13 per share, $16 and $19.
For Cision, the deal highlights the company’s success in recent years and sets it up for even more growth moving forward, GTCR Managing Director Mark Anderson said.
"This transaction reflects the significant progress Cision has made in its effort to build the most comprehensive media intelligence platform in the world," Anderson said. "We look forward to Cision continuing to expand and accelerate its global leadership position as a public company with access to new sources of capital."
Cision’s current management team, which is led by CEO Kevin Akeroyd and Chief Financial Officer Jack Pearlstein, will continue to run the company, according to the statement. Capitol’s Ein will join Cision’s board of directors as vice chairman and Dyson Dryden, Capitol’s president and CFO, will also join the board.
Capitol went public in October 2015. The special purpose acquisition vehicle raised $300 million by selling 30 million units for $10 apiece before listing its shares on the Nasdaq.
The combination of Capitol and Cision, which is subject to Capitol shareholder approval, is expected to close during the second quarter of 2017.
Capitol is advised by Latham & Watkins LLP and Graubard Miller. Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Credit Suisse are acting as financial and capital markets adviser.
The Latham team includes corporate partners Paul Sheridan and David Kurzweil and associates Cory Tull and Victoria VanStekelenburg, tax partner Lisa Watts and associate Alan Kimball, securities partner Alexander Cohen and benefits and compensation partner Adam Kestenbaum.
Cision is advised by Kirkland & Ellis LLP, and PJT Partners is acting as financial adviser.
The Kirkland team includes corporate partners Stephen Ritchie, Mark Fennell, Sean Kramer and Aprajita Dhundia and associates Peter Stach, Jeff Gilson and Nick-Raj Birdi; capital markets partners Carol Anne Huff, Craig Garvey and associate Kevin Frank; executive compensation partner Dean Bachus and associate Kate Coverdale; technology and IP transactions partner Seth Traxler and associate Ryan Farrell; tax partners William Welke, Russell Light, Polina Liberman and Dulcie Daly; employee benefits partners Alexandra Mihalas and Melissa Grim; labor and employment partner Matthew Keiser and associate Evangelia Podaras; real estate partner John Caruso and associate John Jefferson; environmental transaction partner Paul Tanaka and associate Michael Mahoney; antitrust partners Michael Thorpe and Sarah Jordan; debt finance partners Christopher Butler and Thomas Dobleman; director of mergers and acquisitions clearance Kurt Wunderlich; and mergers and acquisitions clearance specialist Mollie Tuomisto.
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