Digital Media Solutions Holdings, LLC (“DMS” or the “Company”) and
Leo Holdings Corp. (NYSE: LHC) (“Leo”), a publicly traded special
purpose acquisition company, announced today that Leo and DMS have
entered into a definitive business combination agreement (the
“Business Combination Agreement”).
DMS is a martech-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 performance-driven brand and
marketplace solutions. DMS deploys a robust database of consumer
intelligence and leverages significant proprietary media
distribution to a diverse set of advertisers across a variety of
end markets including but not limited to insurance, education,
health & wellness, consumer finance and home services.
Immediately following the closing of the proposed transaction
(the “Business Combination”), Leo intends to change its name to
Digital Media Solutions, Inc. (“New DMS”). The current DMS
executive management team, led by co-founders Joe Marinucci and
Fernando Borghese, will lead New DMS, which is expected to trade on
the New York Stock Exchange. The Business Combination will
introduce DMS to the equity capital markets as a publicly listed
company with a total enterprise value of $757 million or 13.2x the
Company’s fiscal year 2020 expected Adjusted EBITDA of
$57 million and 10.0x the Company’s fiscal year 2021 expected
Adjusted EBITDA of $75 million.
The DMS management team currently owns 54% of the Company, with
private equity funds managed by Clairvest Group, Inc. (TSX: CVG)
(“Clairvest”) owning the remaining 46%. The DMS management team and
the Clairvest private equity funds are expected to retain a
significant continuing equity interest in New DMS, representing
over 40% of the New DMS economic interests and over 50% of the
voting interests in New DMS, assuming no redemptions by Leo’s
public shareholders. 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 in connection with the Business
Combination.
DMS Company Highlights
DMS leverages proprietary technology solutions, significant
proprietary media distribution and data-driven processes to help
large brands acquire their customers. DMS helps clients de-risk
marketing spend across digital channels through its
pay-for-performance model, meaning the Company is paid to deliver
customers rather than impressions. The Company delivers results
using a diversified portfolio of owned and operated vertical
marketplaces, which match consumers with relevant offers within
each vertical (e.g., insurance), as well as full-funnel customer
acquisition programs where DMS attracts and converts customers on a
brand’s behalf. DMS has developed significant barriers to entry
including its proprietary, privacy-compliant database of over 150
million consumer profiles built via over $1 billion of ad
spend on the DMS platform, and its white label software tools that
embed DMS’ position inside marketing departments. The Company has
consistently proven its ability to produce results for large
brands, as evidenced by DMS’ 95% customer retention rate.
“We were quickly attracted to DMS’ combination of technology
solutions, diversified blue-chip customer base and, most
importantly, their high free cash flow conversion profile. While
the current environment is presenting unique challenges to all
companies, DMS is benefitting from marketers trying to reach
growing audiences. DMS is well-positioned to take advantage of an
ongoing, large-scale shift of marketing dollars to digital
performance-based solutions,” said Lyndon Lea, Chairman and Chief
Executive Officer of Leo.
Joe Marinucci, CEO of DMS, added: “Over the past decade, we have
been a critical partner to large global brands in acquiring new
customers and deploying marketing spend efficiently. We’ve built a
diversified, sector-agnostic business model that counts Fortune 100
companies across the Insurance, Finance, Education, Health &
Wellness and Home Services verticals as customers. We’re thrilled
to achieve this exciting milestone together with Leo, and look
forward to further accelerating our growth as a public
company.”
Addressing the macroeconomic volatility resulting from the
COVID-19 crisis, Marinucci added, “Our highly diversified,
martech-driven business model is proving resilient. In today’s
environment, there is no greater decision that marketers face than
the one on how to spend their dollars most efficiently. Our
solutions are perfectly suited given they are 100% focused on
return on investment with linear accountability to each dollar
spent. Performance across our portfolio of verticals can be
characterized in one of three ways:
- A significant portion of our revenue comes from verticals that
are in the early stages of transition to digital and therefore
continuing on an elevated growth trajectory like Insurance, Health
& Wellness and Direct-to-Consumer products.
- Some verticals such as Education are counter-cyclical, with
limited impact to client activity.
- Certain marketplace solutions have been impacted, particularly
in Consumer Finance given the reduction in demand for credit card,
lending and other personal banking services. Consumer Finance
represented only approximately 11% of total revenue last year, and
we are optimistic that banks will increase marketing spend as
consumer demand returns following COVID-related disruption. We are
nonetheless being disciplined on the cost side, and have multiple
levers to align expenses with any changes in revenue.”
Key Transaction Terms
Immediately prior to the closing of the Business Combination,
Leo will domesticate as a Delaware corporation and additional
investors will purchase $100 million of Class A common stock of Leo
in a private placement at $10.00 per share. The Business
Combination, which was approved unanimously by Leo’s board of
directors and the Company’s board of managers, is expected to close
prior to July 31, 2020, subject to customary closing conditions,
including U.S. antitrust clearance and approval of Leo’s
shareholders. In addition, under the terms of the Business
Combination Agreement, cash held in Leo’s trust account, net of
redemptions, and the gross proceeds of the private placement must
be no less than $200 million, and such cash will be used (i) to pay
$30 million to DMS to be held on its balance sheet, (ii) to pay
down $10 million of DMS’s current credit facility, (iii) to pay the
parties’ transaction costs and (iv) to pay the cash portion of the
consideration payable to the current DMS equity holders.
Upon closing, New DMS will introduce a high caliber Board of
Directors, all of whom will possess highly relevant experience
critical to driving the New DMS business forward. The Board will be
chaired by Mary Minnick, formerly the Global President of
Marketing, Strategy and Innovation at The Coca-Cola Co. Ms. Minnick
currently serves on the boards of the Target Corporation, Glanbia,
plc and Leo. In addition, the remaining Board members will include
Robbie Isenberg (Managing Director, Clairvest Group), Lyndon Lea
(Chairman & CEO, Leo), Robert Darwent (CFO, Leo), James Miller
(General Counsel and Corporate Secretary, Clairvest Group), Joe
Marinucci (CEO, DMS) and Fernando Borghese (COO, DMS).
For additional information on the Business Combination, see
Leo’s Current Report on Form 8-K, which will be filed
promptly, and other filings with the U.S. Securities and Exchange
Commission (“SEC”), which can be obtained, without charge, at the
website of the SEC at www.sec.gov.
Advisors
Citigroup Global Markets Inc. acted as financial advisor,
capital markets advisor and private placement agent to Leo.
Kirkland & Ellis LLP acted as legal counsel to Leo.
Skadden, Arps, Slate, Meagher & Flom LLP acted as legal counsel
to DMS.
About Digital Media Solutions LLC
DMS is a leading global martech company leveraging innovative,
performance-driven brand and marketplace solutions to connect
consumers and advertisers. DMS deploys a robust database of
consumer intelligence and leverages its industry-leading digital
media distribution to provide customer acquisition campaigns that
grow businesses, offer visibility into the customer experience and
provide accountability for every media dollar spent.
About Leo Holdings Corp.
Leo 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 About the Proposed Transaction and
Where to Find It
In connection with the Business Combination, Leo intends to file
with the SEC a Registration Statement on Form S-4 (the
“Registration Statement”), which will include a preliminary
prospectus and preliminary proxy statement. Leo will mail a
definitive proxy statement/prospectus and other relevant documents
to its shareholders. This press release is
not a substitute for the Registration Statement, the definitive
proxy statement/prospectus or any other document that Leo will send
to its shareholders in connection with the Business Combination.
Investors and security holders of Leo are advised to read,
when available, the proxy statement/prospectus in connection with
Leo’s solicitation of proxies for its extraordinary general meeting
of shareholders to be held to approve the Business Combination (and
related matters) because the proxy statement/prospectus will
contain important information about the Business Combination and
the parties to the Business Combination. The
definitive proxy statement/prospectus will be mailed to
shareholders of Leo as of a record date to be established for
voting on the Business Combination. Shareholders will also be able
to obtain copies of the proxy statement/prospectus, without charge,
once available, at the SEC’s website at www.sec.gov or by
directing a request to: Leo Holdings Corp., 21 Grosvenor Place,
London SW1X 7HF, United Kingdom.
Participants in the Solicitation
Leo and its directors, executive officers, other members of
management, and employees, under SEC rules, may be deemed to be
participants in the solicitation of proxies of Leo’s shareholders
in connection with the Business Combination. Investors
and security holders may obtain more detailed information regarding
the names and interests in the Business Combination of Leo’s
directors and officers in Leo’s filings with the SEC, including
Leo’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2019, which was filed with the SEC on March
13, 2020, as well as in the Registration Statement, which will
include the proxy statement of Leo for the Business
Combination. Shareholders can obtain copies of Leo’s
filings with the SEC, without charge, at the SEC’s website at
www.sec.gov.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Leo’s and DMS’s actual
results may differ from their expectations, estimates and
projections and consequently, you should not rely on these forward
looking statements as predictions of future events. Words such as
“expect,” “estimate,” “project,” “budget,” “forecast,”
“anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,”
“believes,” “predicts,” “potential,” “continue,” and similar
expressions are intended to identify such forward-looking
statements. These forward-looking statements include, without
limitation, Leo’s and DMS’s expectations with respect to future
performance and anticipated financial impacts of the proposed
Business Combination, the satisfaction of the closing conditions to
the Business Combination and the timing of the completion of the
Business Combination. These forward-looking statements involve
significant risks and uncertainties that could cause the actual
results to differ materially from the expected results. Most of
these factors are outside Leo’s and DMS’s control and are difficult
to predict. Factors that may cause such differences include, but
are not limited to: (1) the occurrence of any event, change or
other circumstances that could give rise to the termination of the
Business Combination Agreement; (2) the outcome of any legal
proceedings that may be instituted against Leo and DMS following
the announcement of the Business Combination Agreement and the
transactions contemplated therein; (3) the inability to
complete the proposed Business Combination, including due to
failure to obtain approval of the shareholders of Leo or other
conditions to closing in the Business Combination Agreement;
(4) the occurrence of any event, change or other circumstance
that could give rise to the termination of the Business Combination
Agreement or could otherwise cause the Business Combination to fail
to close; (5) the amount of redemption requests made by Leo’s
shareholders; (6) the inability to obtain or maintain the
listing of the post-business combination company’s common stock on
the New York Stock Exchange following the proposed Business
Combination; (7) the risk that the proposed Business
Combination disrupts current plans and operations as a result of
the announcement and consummation of the proposed Business
Combination; (8) the ability to recognize the anticipated
benefits of the proposed Business Combination, which may be
affected by, among other things, competition, the ability of the
combined company to grow and manage growth profitably and retain
its key employees; (9) costs related to the proposed Business
Combination; (10) changes in applicable laws or regulations;
(11) the possibility that DMS or the combined company may be
adversely affected by other economic, business, and/or competitive
factors; and (12) other risks and uncertainties indicated from time
to time in the proxy statement relating to the proposed Business
Combination, including those under “Risk Factors” in the
Registration Statement, and in Leo’s other filings with the SEC.
Some of these risks and uncertainties may in the future be
amplified by the COVID-19 outbreak and there may be additional
risks that we consider immaterial or which are unknown. It is not
possible to predict or identify all such risks. Leo cautions that
the foregoing list of factors is not exclusive. Leo cautions
readers not to place undue reliance upon any forward-looking
statements, which speak only as of the date made. Leo does not
undertake or accept any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
to reflect any change in its expectations or any change in events,
conditions or circumstances on which any such statement is
based.
No Offer or Solicitation
This press release is for informational purposes only and is
neither an offer to purchase, nor a solicitation of an offer to
sell, subscribe for or buy any securities or the solicitation of
any vote in any jurisdiction pursuant to the Business Combination
or otherwise, nor shall there be any sale, issuance or transfer or
securities in any jurisdiction in contravention of applicable law.
No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the
Securities Act and otherwise in accordance with applicable law.
Non-GAAP Financial Measure and Related
Information
This press release references EBITDA and Adjusted EBITDA, 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 or Adjusted
EBITDA used by DMS may be different from other, similarly
named non-GAAP measures used by others operating in DMS’
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 New DMS with the SEC.
Contacts:
For Digital Media Solutions LLC
Kathy Bryan
201-477-7727
KBryan@dmsgroup.com
For Leo Holdings Corp.
Sherif Guirgis
(310) 800-1005
guirgis@lioncapital.com
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