Combination creates a global top 20 commercial fleet
telematics provider with a focus in rail, government, construction,
trucking, and service verticals.
- 155,000 subscribers across Canada and the
United States
- $58 million total
revenue
- $37 million in recurring
subscription revenue
- Strong balance sheet with over $30
million in cash
TORONTO and VANCOUVER, July 30,
2015 /CNW/ - BSM Technologies Inc. ("BSM") (TSX-V:
GPS), a leading provider of remote monitoring, fleet management,
and fleet diagnostics systems, and Webtech Wireless Inc.
("Webtech") (TSX:WEW), a leading provider of GPS fleet management
solutions, are pleased to announce that BSM and Webtech have
entered into a definitive arrangement agreement (the "Arrangement
Agreement"), unanimously approved by the Boards of Directors of BSM
and Webtech, pursuant to which BSM and Webtech will combine to
create a leading telematics company positioned for growth. The
transaction is structured as a merger of equals with a combined
transaction equity value of approximately $85 million.
Subject to the terms of the Arrangement Agreement, BSM will
acquire all of the outstanding Webtech common shares for
$0.52 in cash plus 2.136 BSM common
shares for each Webtech common share (the "Proposed Transaction").
Upon completion of the Proposed Transaction, existing BSM and
Webtech shareholders will own approximately 51% and 49% of the
combined company, respectively.
Transaction Highlights
The merger is expected to
nearly double the stand-alone revenue of either company and
significantly enhance the profitability of each business. The
combined company will have total revenue of $58 million, of which $37 million is recurring service revenue, and
Adjusted EBITDA of $4.75
million, all on a trailing 12-month basis prior to
anticipated synergies. Expected operational and financial synergies
are anticipated to result in near-term annualized cost savings of
$1.5 million, with additional
expected annualized cost synergies of $2.5
million to $3.5 million as the companies complete the
integration process during the 12 to 18 months post closing.
"The merger between BSM and Webtech marks an important milestone
for both companies," said Aly
Rahemtulla, President and CEO of BSM. "It is an opportunity
to combine two similar sized businesses and create significant
scale in a consolidating market. We believe that upon completion of
the integration process, we will have sufficient scale to
significantly increase our operating margins. As a combined
company, we have an opportunity to leverage our respective best
business practices, leading technology and industry experience to
build an even stronger organization. We are very excited about the
potential to deliver accelerated growth, unlock financial leverage
and establish a dominant position in targeted telematics
verticals."
Both BSM and Webtech have adopted a vertical focus in their
respective go-to-market strategies. BSM's strong presence in rail
will be complemented by Webtech's success in the government and
trucking verticals. In combining each company's recent efforts in
the construction space, the construction vertical represents a
significant growth opportunity for the combined company. By uniting
research and development technologies, the combined company will
have the scale required to develop new innovative products for its
customers.
Management Team and Board of Directors
The combined
company will be headquartered in Toronto,
Canada, and will operate under the name BSM Technologies
Inc. Andrew Gutman, Chairman and
Chief Executive Officer of Webtech will become Chairman of BSM,
following the closing of the Proposed Transaction. The number of
directors on BSM's Board of Directors (the "BSM Board") will remain
at six. Three existing members of the BSM Board will step down, and
Webtech will have the right to designate two Board nominees in
addition to Mr. Gutman. The executive management team will continue
to be led by current BSM President and Chief Executive Officer, Mr.
Aly Rahemtulla. Mr.
Louis De Jong will continue as the
Chief Financial Officer.
"We are very excited about merging with BSM, and are confident
that this strategic step is in the best interest of our
shareholders, customers and employees," said Andrew Gutman, Webtech Chairman and Chief
Executive Officer. "We will be stronger together. Over the past
year, the Webtech management team and Board of Directors have been
intensely committed to improving operating efficiency,
strengthening sales execution, introducing new product offerings
and, overall, better positioning the company to capitalize on our
growth prospects. Through this merger, we will benefit from the
progress we have made, and be better able to accelerate growth
going forward. We look forward to the increased financial and
operational resources that this merger will provide, and we are
excited about our future prospects."
Transaction Details
Subject to the terms of the
Arrangement Agreement, BSM will acquire all of the outstanding
Webtech common shares for $0.52 in
cash plus 2.136 BSM common shares for each Webtech common share.
Upon completion of the Proposed Transaction, existing BSM and
Webtech shareholders will own approximately 51% and 49% of the
combined company, respectively. Webtech's outstanding options will
be adjusted in accordance with their terms such that the number of
BSM common shares received upon exercise and the exercise price
will reflect the exchange ratio.
The Proposed Transaction will be carried out by way of a
court-approved plan of arrangement under the Business
Corporations Act (British
Columbia) and will require the approval of at least 66 2/3%
of the votes cast by the shareholders of Webtech, plus any majority
of the minority approvals of Webtech shareholders that may be
required, at a special meeting expected to take place in
September 2015.
Webtech's Board of Directors have determined the Proposed
Transaction is in the best interests of Webtech and its
shareholders, having taken into account advice from its financial
advisor, and have unanimously approved the Proposed Transaction and
recommends that Webtech's shareholders vote in favour of the
Proposed Transaction. The directors, officers and certain principal
shareholders of Webtech, who together control approximately 33% of
the outstanding Webtech common shares, have signed voting support
agreements and confirmed their intention to vote their Webtech
common shares in favour of the Proposed Transaction.
BSM's shareholders will also be asked to approve the issuance of
the BSM shares in connection with the Proposed Transaction by
majority vote at a special meeting expected to take place in
September 2015.
BSM's Board of Directors have determined the Proposed
Transaction is in the best interest of BSM and its shareholders,
having taken into account advice from its financial advisor, and
have unanimously approved the Proposed Transaction and recommends
that BSM's shareholders vote in favour of the share issuance in
connection with the Proposed Transaction. The directors and
officers of BSM have signed voting support agreements and confirmed
their intention to vote their BSM common shares in favour of the
Proposed Transaction.
In addition to shareholder and court approvals, the Proposed
Transaction is subject to closing conditions customary in
transactions of this nature. Further, BSM anticipates applying to
graduate to the Toronto Stock Exchange from the TSXV under the
existing symbol for BSM. Webtech and BSM anticipate that the
transaction will be completed on September
30, 2015. The Proposed Transaction includes customary
provisions, including covenants not to solicit other acquisition
proposals and the right to match any superior proposals.
Termination fees of $1.45 million
will be paid to BSM, or Webtech in certain circumstances should the
Proposed Transaction not be completed.
None of the BSM securities to be issued pursuant to the
Arrangement have been or will be registered under the United States
Securities Act of 1933, as amended (the "U.S. Securities Act"), or
any state securities laws, and any BSM securities issued pursuant
to the Arrangement are anticipated to be issued in reliance upon
available exemptions from such registration requirements pursuant
to Section 3(a)(10) of the U.S. Securities Act and applicable
exemptions under state securities laws. This press release does
not constitute an offer to sell, or the solicitation of an offer to
buy, any securities.
Further information regarding the Proposed Transaction will be
included in the joint management proxy circular expected to be
mailed to BSM and Webtech shareholders in August. Copies of the
Arrangement Agreement and joint management proxy circular will be
available on SEDAR at www.sedar.com.
BSM intends to finance the cash portion of the Proposed
Transaction with cash on-hand.
Advisors and Counsel
TD Securities Inc. is acting as
financial advisor to BSM and has provided an opinion to the BSM
Board that, as of the date thereof and subject to the assumptions,
limitations and qualifications set forth therein, the consideration
to be paid by BSM to Webtech shareholders pursuant to the
Arrangement Agreement is fair, from a financial point of view, to
BSM. CIBC World Markets Inc. is acting as financial advisor to
Webtech and has provided an opinion to the Board of Directors of
Webtech that, as of the date thereof and subject to the
assumptions, limitations and qualifications set forth therein, the
consideration to be received by Webtech shareholders pursuant to
the Arrangement Agreement is fair, from a financial point of view,
to Webtech shareholders. BSM retained Cassels Brock & Blackwell LLP as its
Canadian legal counsel and Neal
Gerber & Eisenberg LLP as its U.S. legal counsel. Blake,
Cassels & Graydon LLP is acting as Canadian legal counsel to
Webtech with Shearman and Sterling, LLP acting as its U.S. legal
counsel.
Conference Call Information
BSM and Webtech will host
a joint conference call to discuss the proposed merger on
July 31, 2015 at 8:30 a.m. ET. All interested parties are invited
to participate.
Dial-In
Number:
|
647-427-7450 or
1-888-231-8191
|
Conference
Id:
|
93778694
|
Taped
Replay:
|
416-849-0833 or
1-855-859-2056
Reference Number
93778694
Available Until
Thursday, August 8, 2015 At Midnight
|
Live
Webcast:
|
http://bit.ly/1It9uGG
Webcast Will Be
Archived For 90 Days
|
Quarterly Earnings Release
BSM will report its fiscal
2015 third quarter results for the period ended June 30, 2015 with a press release after markets
on August 5, 2015 and host a
conference call at 8:30 a.m. ET on
August 6, 2015.
Webtech will report its fiscal 2015 second quarter results for
the period ended June 30, 2015 with a
press release on August 6, 2015
before markets open and host a conference call at 11:00 a.m. ET on August 6,
2015.
Non-IFRS Disclosures
BSM and Webtech believe that
investors use certain non-IFRS measures as indicators to assess
telematics companies, specifically EBITDA and adjusted EBITDA.
"EBITDA" and "adjusted EBITDA" are measures of
our operating profitability. We believe that EBITDA and
adjusted EBITDA provide useful information to our investors
because they exclude transactions not related to the core cash
operating business activities, allowing meaningful analysis of the
performance of our core cash operations. EBITDA is an indicator of
the financial results generated by our business activities
excluding: the impact of any financing activities; amortization of
property, equipment and intangible assets; and taxes with respect
to various jurisdictions. Adjusted EBITDA is a further refinement
of EBITDA to remove the effect of: acquisition, integration and
restructuring related costs; share-based compensation expense;
write-off of goodwill or other impairments to any financial and
non-financial assets; fair value adjustments on contingent
consideration; and costs related to certain legal actions. As such,
adjusted EBITDA provides more meaningful continuity with respect to
the comparison of our operating results over time. EBITDA and
adjusted EBITDA are derived from the consolidated statements of
operations and comprehensive income and statement of cash flows. We
believe that using these metrics enhances an overall understanding
of the Company's results and we present them for that purpose. See
BSM's management discussion & analysis on its SEDAR profile for
a reconciliation of these non-IFRS measures.
Cautionary Note Regarding Forward-Looking
Statements
This news release includes certain
forward-looking statements or information under applicable
Canadian, U.S. and other securities laws. Such forward-looking
information and statements are often, but not always, identified by
the use of words such as "seek", "anticipate", "believe", "plan",
"estimate", "expect" and "intend" and statements that an event or
result "may", "will", "should", "could", or "might" occur or be
achieved and any other similar expressions. Such forward-looking
information includes but is not limited to, statements with respect
to the potential completion and timing of the Proposed Transaction,
the future financial or operating performance of the combined
company and their respective verticals, statements regarding
synergies and financial impact of the Proposed Transaction, the
board and management team following completion of the Proposed
Transaction, the terms and conditions of the Proposed Transaction,
the benefits of the Proposed Transaction and the timing and
possible outcome of shareholder and regulatory matters. These
forward-looking statements, and any assumptions upon which they are
based, are made in good faith and reflect our current judgment
regarding the direction of our business and include, but are not
limited to, efficiently and successfully completing a network
operating centre consolidation, efficiently and successfully
completing a hardware and software consolidation, receiving
increased volume discounts from suppliers and efficiently and
successfully realizing operational efficiencies. Management
believes that these assumptions are reasonable; however, some risks
include, but are not limited to, the failure to efficiently or
successfully complete network centre consolidation, the failure to
efficiently or successfully complete hardware and software
consolidation, the failure to realize or receive increased volume
discounts from suppliers and the failure to efficiently or
successfully achieve the expected operational efficiencies. If any
of the assumptions underlying the expected synergies prove to be
incorrect, then the net income of the resulting company will not
increase by the amount of such shortfall. BSM Technologies Inc. and
Webtech Wireless Inc. have provided the anticipated financial,
operational and cost synergies in this press release to assist
shareholders in their understanding of the Proposed Transaction.
Readers are cautioned that this information may not be appropriate
for any other purposes. Forward-looking information is subject to
known and unknown risks, uncertainties and other factors that could
cause actual results to differ materially from those contained in
the forward-looking information. Some of these risks, uncertainties
and other factors are described under the heading "Risk Factors" in
BSM's annual management discussion and analysis and in Webtech's
annual information forms available at www.sedar.com.
Forward-looking information is based on estimates and opinions of
management at the date the statements are made. Except as required
by applicable law, BSM and Webtech do not undertake any obligation
to update forward-looking information. Readers should not place
undue reliance on forward-looking information.
About BSM Technologies Inc. (bsmwireless.com)
BSM Technologies Inc., through its subsidiary BSM Wireless Inc., is
a leading provider of remote monitoring, fleet tracking, fleet
maintenance, and business intelligent engine providing real time,
webbased tracking of mobile and fixed assets. BSM provides
solutions for commercial, government, and law enforcement
organizations who manage and operate diverse assets and large
fleets, and who seek to enhance customer service, improve the
safety of their drivers and vehicles, and lower business costs.
About Webtech Wireless®
Webtech Wireless is
a leader in providing fleet management telematics, GPS and
automatic vehicle location (AVL) solutions that improve efficiency,
accountability and reduce costs. Our end-to-end solutions automate
record keeping and regulatory compliance, reduce fuel burn and
idling, mitigate risk, and keep drivers safe. Customers trust us to
ensure people are accountable and vehicles are visible, through the
cloud, in the office, or straight to mobile devices. Our Webtech
Fleet Center™ software solution, and our supporting product suite,
including Webtech Driver Center™ and Webtech 511®, provides
advanced fleet management capabilities for winter maintenance,
public works and waste management fleets within government markets;
and fleet performance, driver behavior, Hours of Service (HOS), and
Electronic Logging Device (ELD) technology for commercial fleet
operations and compliance. Please
visit www.webtechwireless.com.
All amounts in Canadian dollars (CAD$) unless otherwise noted.
Neither the TSX, the TSX Venture Exchange nor their Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release. No stock exchange, securities
commission or other regulatory authority has approved or
disapproved the information contained herein.
SOURCE Webtech Wireless