Leo Holdings Corp. (NYSE: LHC), a Cayman Islands exempted company
(“Leo”), has signed a term sheet and is working on a definitive
agreement with Digital Media Solutions LLC (“DMS”).
DMS is a technology enabled business capitalizing on the secular
shift of advertising dollars from traditional offline channels to
online digital channels by helping connect consumers and
advertisers with innovative brand and marketplace solutions. DMS
provides performance-based solutions to a diverse set of
advertisers across a variety of end markets including but not
limited to insurance, consumer finance and home services. Leo
believes that DMS’s financial profile is compelling with
significant historical revenue growth, expected revenue growth for
2020 of 30% and strong EBITDA margins and cash conversion.
The total enterprise value of the proposed transaction of $757
million represents a multiple of 12.0x fiscal year 2020
expected adjusted EBITDA of $63 million. Leo believes the
valuation at consummation of the transaction represents a
meaningful discount to relevant public comparable multiples.
Additionally, Leo has secured $100 million in commitments
from a number of institutional investors to purchase common equity
in the post-combination company at $10.00 per share in support of
the transaction. Once the transaction closes, DMS is expected to
trade on the NYSE under ticker “DMS”.
The board of directors of Leo has unanimously approved this
transaction. The management team owns 54% of DMS with private
equity funds managed by Clairvest Group, Inc. (TSX: CVG), owning
the remaining 46%. Clairvest is supportive of management and the
proposed transaction. The sellers are expected to retain a
significant continuing equity interest in the company representing
over 40% of the company on a combined basis. This percentage
is subject to change depending on the number of Class A ordinary
shares of Leo that are redeemed by Leo’s public shareholders.
Completion of the proposed transaction is subject to the
negotiation and execution of a definitive agreement providing for
the transaction, satisfaction of the closing conditions included
therein and approval of the transaction by Leo’s
shareholders and Clairvest’s board of directors. Accordingly,
there can be no assurance that a definitive agreement will be
entered into or that the proposed transaction will be
consummated.
Leo has mailed to its shareholders of record as of
January 17, 2020, a definitive proxy statement for a special
meeting of shareholders to be held on February 11, 2020 to approve
an extension of time for Leo to complete an initial business
combination through July 31, 2020.
Advisors
Citigroup Global Markets Inc. is acting as capital markets
advisor, financial advisor, and private placement agent, and
Kirkland & Ellis LLP is acting as legal counsel to Leo as
part of the transaction. BofA Securities is acting as
financial advisor to DMS.
About Leo Holdings Corp.
Leo Holdings Corp. is a blank check company formed for the
purpose of effecting a merger, share exchange, asset acquisition,
share purchase, reorganization or similar business combination with
one or more businesses.
Important Information and Where to Find It
If a legally binding definitive agreement is entered into, a
full description of the terms of the transaction will be provided
in a proxy statement for the shareholders of Leo (the “Proxy
Statement”), to be filed with the U.S. Securities and Exchange
Commission (the “SEC”). Leo urges investors, shareholders and other
interested persons to read, when available, the preliminary Proxy
Statement as well as other documents filed with the SEC because
these documents will contain important information about Leo, the
potential target company and the transaction. The definitive Proxy
Statement will be mailed to shareholders of Leo as of a record date
to be established for voting on the proposed transaction.
Shareholders will also be able to obtain a copy of the Proxy
Statement, without charge, by directing a request to: Leo Holdings
Corp., 21 Grosvenor Place, London SW1X 7HF. The preliminary and
definitive Proxy Statement, once available, can also be obtained,
without charge, at the SEC’s website (www.sec.gov).
Participants in the Solicitation
Leo and its directors and executive officers may be considered
participants in the solicitation of proxies with respect to the
potential transaction described herein under the rules of the SEC.
Information about the directors and executive officers of Leo is
set forth in Leo’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2018, which was filed with
the SEC on February 29, 2019. Information regarding the
persons who may, under the rules of the SEC, be deemed participants
in the solicitation of the shareholders in connection with the
potential transaction will be set forth in the Proxy Statement when
it is filed with the SEC. These documents can be obtained free of
charge from the sources indicated above.
DMS and its directors and executive officers may also be deemed
to be participants in the solicitation of proxies in connection
with the potential transaction described herein. Information
regarding the participants and their interests in the proposed
transaction will be included in the Proxy Statement.
Non-Solicitation
The disclosure herein is not a proxy statement or solicitation
of a proxy, consent or authorization with respect to any securities
or in respect of the potential transaction and shall not constitute
an offer to sell or a solicitation of an offer to buy the
securities of Leo, nor shall there be any sale of any such
securities in any state or jurisdiction in which such offer,
solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of such state or
jurisdiction. No offer of securities shall be made except by means
of a definitive document.
Forward-Looking Statements
The disclosure herein includes certain statements that are not
historical facts but are forward-looking statements for purposes of
the safe harbor provisions under the United States Private
Securities Litigation Reform Act of 1995. Forward-looking
statements generally are accompanied by words such as “believe,”
“may,” “will,” “estimate,” “continue,” “anticipate,” “intend,”
“expect,” “should,” “would,” “plan,” “predict,” “potential,”
“seem,” “seek,” “future,” “outlook,” and similar expressions that
predict or indicate future events or trends or that are not
statements of historical matters. These forward-looking statements
include, but are not limited to, statements regarding projections,
estimates and forecasts of revenue and other financial and
performance metrics and projections of market opportunity and
expectations, Leo’s ability to enter into a definitive agreement or
consummate a transaction with DMS and Leo’s ability to obtain the
financing necessary to consummate the potential transaction. These
statements are based on various assumptions and on the current
expectations of Leo’s management and are not predictions of actual
performance. These forward-looking statements are provided for
illustrative purposes only and are not intended to serve as, and
must not be relied on by any investor as, a guarantee, an
assurance, a prediction or a definitive statement of fact or
probability. Actual events and circumstances are difficult or
impossible to predict and will differ from assumptions. Many actual
events and circumstances are beyond the control of Leo and DMS.
These forward looking statements are subject to a number of risks
and uncertainties, including: Leo’s ability to enter into a
definitive agreement with respect to the proposed business
combination or consummate a transaction with DMS; the risk that the
approval of the shareholders of Leo for the potential transaction
is not obtained; failure to realize the anticipated benefits of the
potential transaction, including as a result of a delay in
consummating the potential transaction or difficulty in integrating
the businesses of Leo and DMS; the amount of redemption requests
made by Leo’s shareholders and the amount of funds remaining in
Leo’s trust account after satisfaction of such requests; those
factors discussed in Leo’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2018 under the heading
“Risk Factors,” and other documents of Leo filed, or to be filed,
with the SEC. If the risks materialize or assumptions prove
incorrect, actual results could differ materially from the results
implied by these forward-looking statements. There may be
additional risks that Leo presently does not know or that Leo
currently believes are immaterial that could also cause actual
results to differ from those contained in the forward-looking
statements. In addition, forward-looking statements reflect Leo’s
expectations, plans or forecasts of future events and views as of
the date hereof. Leo anticipates that subsequent events and
developments will cause Leo’s assessments to change. However, while
Leo may elect to update these forward-looking statements at some
point in the future, Leo specifically disclaims any obligation to
do so. These forward-looking statements should not be relied upon
as representing Leo’s assessments as of any date subsequent to the
date of this disclosure statement. Accordingly, undue reliance
should not be placed upon the forward-looking statements.
Non-GAAP Financial Measure and Related
Information
The disclosure herein references EBITDA and EBITDA margin, which
are financial measures that are not prepared in accordance with
U.S. generally accepted accounting principles (“GAAP”).
These non-GAAP financial measures do not have a
standardized meaning, and the definition of EBITDA used by DMS may
be different from other, similarly
named non-GAAP measures used by others operating in the
target’s industry. In addition, such financial information is
unaudited and/or does not conform to SEC
Regulation S-X and as a result such information may be
presented differently in future filings by the Company with the
SEC.
Contact
InvestorsSherif Guirgis(310) 800-1005guirgis@lioncapital.com
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