All-Stock Transaction to Enhance Financial
Scale; Estimated $70 Million of Software Revenue with $50 Million
Recurring
Provides Strategic Opportunities to
Accelerate Revenue Growth, Increase Operating Efficiencies and Open
New Sales Channels
Synacor, Inc. (Nasdaq: SYNC), a cloud-based software and
services company serving global video, internet and communications
providers, device manufacturers, governments and enterprises, and
Qumu Corporation (Nasdaq: QUMU) a leading provider of tools to
create, manage, secure, distribute and measure the success of live
and on-demand video for the enterprise, today announced plans to
combine in an all-stock transaction.
Merger Rationale and Highlights
- Strategic Collaboration product fit that brings together Qumu’s
Enterprise Video platform with Synacor’s Cloud ID Identity &
Access Management platform, and the Zimbra Email &
Collaboration platform.
- Improves operating scale and strengthens global presence with
the combined business expected to generate more than $120 million
in annual revenue on a pro-forma basis with an estimated $70
million of software & services segment revenue, $50 million of
which would be recurring, and about $50 million in continuing
portal & advertising segment revenue.
- $4 - $5 million in annualized operating synergies expected in
the first fiscal year following closing that include overlapping
public company costs and various operating expenses.
- Accelerates Qumu’s go-to-market strategy via Synacor’s 1900+
Channel-Partners and strengthens cross selling opportunities.
- Qumu’s Global 2000 and Fortune 500-heavy customer base,
including the world’s largest companies and most valuable brands,
complementing Synacor’s base of more than 4,000 Business,
Government, Service Provider, Content Provider, and Publisher
customers.
The merger, which is expected to close in mid-2020, creates a
global SaaS-based collaboration software-focused business with
significant operational synergies and cross selling
opportunities.
Management Commentary
“This is a strategic and highly synergistic combination that
creates operating software scale and accelerates growth,” said
Himesh Bhise, CEO of Synacor. “Together with Qumu, we will be a
software-focused business with about $50 million of high-margin
recurring revenue, positioned in the attractive Collaboration
product segments of Email, Identity, and Video, with an enviable
customer base that spans Enterprise, small and medium business,
Government, Service Providers, Content Providers, and Publishers.
Our portal and advertising business will continue to meaningfully
contribute to Synacor’s top and bottom line, as we benefit from the
expanded scale and scope of our software and services segment. This
is an exciting day for the employees, customers, and shareholders
of Qumu and Synacor.”
“With Synacor having an extensive network of more than 1,900
distribution partners and an established base of more than 4,000
customers, the merger will immediately accelerate our go-to-market
efforts,” said Vern Hanzlik, President and CEO of Qumu. “As the
demand for enterprise collaboration solutions continues to expand,
we believe there will be a significant opportunity for us to
position a combined email, video and identity offering to reach a
much wider cross-section of the enterprise market with a scalable,
highly secure and extensible solution for cloud-based and hybrid
deployments.”
Combined Business Financial Overview
The combined company is expected to have over $120 million in
annual revenue on a pro forma basis. This will include an estimated
$70 million in software revenue, about 70% of which is recurring,
and approximately $50 million in revenues from Synacor’s portal and
advertising business. This is based upon the mid-point of Synacor’s
current Full-Year 2019 guidance adjusted to exclude revenue related
to ATT.net as previously disclosed and adding Qumu’s preliminary
and unaudited Full-Year 2019 results.
The deal is expected to be accretive on both an adjusted EBITDA
and adjusted EPS basis in the first fiscal year after close with
expected annualized operational synergies of $4 - $5 million and
excluding purchase accounting adjustments.
Transaction Details
The transaction is structured as an all-stock deal. Under the
terms of the merger agreement, each share of Qumu common stock
issued and outstanding as of the effective date of the merger will
be converted into approximately 1.61 shares of Synacor common
stock. After closing, Synacor common stock, including the shares
issued in the merger, will trade on the Nasdaq under the ticker
“SYNC”.
Upon closing, Synacor stockholders are expected to own
approximately 64.4% and Qumu shareholders are expected to own
approximately 35.6% of the stock of the combined company.
Leadership and Governance
Post close, Himesh Bhise will continue as Chief Executive
Officer and Tim Heasley as Chief Financial Officer of Synacor. Vern
Hanzlik, the CEO of Qumu, will join Synacor as Chief Revenue
Officer, Software & Services.
The Board of Directors of the combined company will consist of
seven directors - three directors to be appointed by Synacor, two
directors to be appointed by Qumu and Synacor CEO Himesh Bhise. The
reconstituted Board of Directors will conduct a search to identify
a new, seventh independent director with software and SaaS
experience who is anticipated to serve as Chairperson of the
combined company.
Timing and Approvals
This transaction has been unanimously approved by the Boards of
Directors of both companies and is expected to close mid-2020,
subject to obtaining required approval from the stockholders of
both Synacor and Qumu, and satisfaction of other customary closing
conditions.
Canaccord Genuity is acting as financial advisor and Gunderson
Dettmer is acting as legal advisor to Synacor. Stifel Financial is
acting as financial advisor and Ballard Spahr LLP is acting as
legal advisor to Qumu.
Joint Conference Call to Discuss the Transaction
Synacor and Qumu will host a joint investor conference call
today Tuesday, February 11, 2020 at 8:30 a.m. Eastern Time to
discuss details of the transaction. Interested parties may join the
conference call by dialing:
- U.S. dial-in: (844) 369-8770
- International dial-in: (862) 298-0840
- Conference ID: 59279
A live and archived webcast and related presentation materials
will be available on Synacor’s Investor Relations website at
https://www.synacor.com/investor-relations/events-and-presentations
and Qumu’s Investor Relations website at
https://qumu.com/en/investor-relations/.
Following the conclusion of the live call, a replay of the
webcast will be available on the Investor Relations section of the
both Companies website for at least 90 days. A telephonic replay of
the conference call will also be available from 11 a.m. ET on
February 11, 2020 until 11:59 p.m. ET on February 25, 2020 by
dialing 1-877-481-4010 or 1-919-882-2331 for callers outside the
U.S. The conference ID is 59279.
About Synacor
Synacor (Nasdaq: SYNC) is a cloud-based software and services
company serving global video, internet and communications
providers, device manufacturers, governments and enterprises.
Synacor’s mission is to enable its customers to better engage with
their consumers. Its customers use Synacor’s technology platforms
and services to scale their businesses and extend their subscriber
relationships. Synacor delivers managed portals, advertising
solutions, email and collaboration platforms, and cloud-based
identity management. www.synacor.com
About Qumu
Qumu Corporation (Nasdaq: QUMU) is the leading provider of
best-in-class tools to create, manage, secure, distribute and
measure the success of live and on-demand video for the enterprise.
Backed by the most trusted and experienced team in the industry,
the Qumu platform enables global organizations to drive employee
engagement, increase access to video, and modernize the workplace
by providing a more efficient and effective way to share
knowledge.
Non-GAAP Financial Information
This press release includes references to Adjusted EBITDA and
Adjusted EPS, financial measures that are not prepared in
accordance with U.S. generally accepted accounting principles
(“GAAP”). The companies compute Adjusted EBITDA differently, but
each use Adjusted EBITDA in operating their respective businesses
because management believes they are less susceptible to variances
in actual operating performance that can result from the excluded
items. The companies present Adjusted EBITDA to investors because
it is a key measure used by their respective management and Board
of Directors to understand and evaluate core operating performance
and trends, to prepare and approve the annual budget and to develop
short- and long-term operational plans. The items excluded from
Adjusted EBITDA are important in understanding Synacor’s and Qumu’s
financial performance, and should not be considered in isolation
of, or as an alternative to, GAAP financial measures. Since
Adjusted EBITDA for both companies are not measures determined in
accordance with GAAP, have no standardized meaning prescribed by
GAAP and are susceptible to varying calculations, these measures,
as presented, may not be comparable to other similarly titled
measures of other companies. Adjusted EBITDA for Synacor is defined
as net income (loss) before taxes, stock-based compensation
expense, asset impairment, restructuring costs, and certain legal
and professional fees. Adjusted EBITDA for Qumu is defined as net
income (loss) excluding items related to interest income and
expense, the impact of income-based taxes, depreciation and
amortization, stock-based compensation, change in fair value of
warrant liabilities, foreign currency gains and losses, and other
non-operating income and expenses.
The presentation of these non-GAAP financial measures is not
intended to be considered in isolation or as a substitute for
projections prepared in accordance with GAAP. The principal
limitation of these non-GAAP financial measures is that they
exclude significant elements that are required to be recorded by
GAAP. In addition, they are subject to inherent limitations as they
reflect the exercise of judgments by management in determining
these non-GAAP financial measures.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities law, including, without
limitation, financial results of the companies individually or on a
combined basis, potential cost savings, timing of the closing of
the transaction, potential benefits of the transaction, and
strategic and operational plans, that are subject to various risks
and uncertainties that could cause actual results to differ
materially from those expressed or implied in such statements.
Words such as “anticipate,” “expect,” “project,” “intend,”
“believe,” and words and terms of similar substance used in
connection with any discussion of future plans, actions or events
identify forward-looking statements. Such statements are subject to
risks and uncertainties that include, but are not limited to: (i)
Synacor or Qumu may be unable to obtain shareholder approval as
required for the merger; (ii) other conditions to the closing of
the merger may not be satisfied; (iii) the merger may involve
unexpected costs, liabilities or delays; (iv) the effect of the
announcement of the merger on the ability of Synacor or Qumu to
retain and hire key personnel and maintain relationships with
customers, suppliers and others with whom Synacor or Qumu does
business, or on Synacor’s or Qumu’s operating results and business
generally; (v) Synacor’s or Qumu’s respective businesses may suffer
as a result of uncertainty surrounding the merger and disruption of
management’s attention due to the merger; (vi) the outcome of any
legal proceedings related to the merger; (vii) Synacor or Qumu may
be adversely affected by other economic, business, and/or
competitive factors; (viii) the occurrence of any event, change or
other circumstances that could give rise to the termination of the
merger agreement; (ix) the estimated financial results of each
company for 2019 may not be representative of the combined
company’s results for 2020 or any future period; (x) risks that the
merger disrupts current plans and operations and the potential
difficulties in employee retention as a result of the merger; and
(xi) other risks to consummation of the merger, including the risk
that the merger will not be consummated within the expected time
period or at all. Additional factors that may affect the future
results of Synacor and Qumu are set forth in their respective
filings with the Securities and Exchange Commission (SEC),
including each of Synacor’s and Qumu’s most recently filed Annual
Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K and other filings with the SEC, which
are available on the SEC’s website at www.sec.gov. The risks and
uncertainties described above and in Synacor’s most recent Annual
Report on Form 10-K and Qumu’s most recent Annual Report on Form
10-K are not exclusive and further information concerning Synacor
and Qumu and their respective businesses, including factors that
potentially could materially affect its business, financial
condition or operating results, may emerge from time to time.
Readers are urged to consider these factors carefully in evaluating
these forward-looking statements. Readers should also carefully
review the risk factors described in other documents that Synacor
and Qumu file from time to time with the SEC. The forward-looking
statements in this press release speak only as of the date of this
press release. Except as required by law, Synacor and Qumu assume
no obligation to update or revise these forward-looking statements
for any reason, even if new information becomes available in the
future.
No Offer or Solicitation
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval with respect to the proposed merger or
otherwise. No offer of securities shall be made except by means of
a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Additional Information and Where to Find It
In connection with the proposed merger between Synacor and Qumu,
Synacor intends to file a registration statement on Form S-4
containing a joint proxy statement/prospectus of Synacor and Qumu
and other documents concerning the proposed merger with the SEC.
The definitive proxy statement will be mailed to the stockholders
of Synacor and Qumu in advance of the meeting. BEFORE MAKING ANY
VOTING DECISION, SYNACOR’S AND QUMU’S RESPECTIVE STOCKHOLDERS ARE
URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY
WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS FILED BY EACH OF
SYNACOR AND QUMU WITH THE SEC IN CONNECTION WITH THE PROPOSED
MERGER OR INCORPORATED BY REFERENCE THEREIN BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND
THE PARTIES TO THE PROPOSED TRANSACTION. Investors and security
holders will be able to obtain a free copy of the joint proxy
statement/prospectus and other documents containing important
information about Synacor and Qumu, once such documents are filed
with the SEC, through the website maintained by the SEC at
www.sec.gov. Synacor and Qumu make available free of charge at
www.synacor.com and www.qumu.com, respectively (in the “Investor
Relations” section), copies of materials they file with, or furnish
to, the SEC. The contents of the websites referenced above are not
deemed to be incorporated by reference into the registration
statement or the joint proxy statement/prospectus.
Participants in the Solicitation
This document does not constitute a solicitation of proxy, an
offer to purchase or a solicitation of an offer to sell any
securities. Synacor, Qumu and their respective directors, executive
officers and certain employees may be deemed to be participants in
the solicitation of proxies from the stockholders of Synacor and
Qumu in connection with the proposed merger. Information regarding
the special interests of these directors and executive officers in
the proposed merger will be included in the joint proxy
statement/prospectus referred to above. Security holders may also
obtain information regarding the names, affiliations and interests
of Synacor’s directors and executive officers in Synacor’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2018,
which was filed with the SEC on March 14, 2019, and its definitive
proxy statement for the 2019 annual meeting of stockholders, which
was filed with the SEC on April 5, 2019. Security holders may
obtain information regarding the names, affiliations and interests
of Qumu’s directors and executive officers in Qumu’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2018, which was
filed with the SEC on March 15, 2019, and its definitive proxy
statement for the 2019 annual meeting of shareholders, which was
filed with the SEC on April 9, 2019. To the extent the holdings of
Synacor securities by Synacor’s directors and executive officers or
the holdings of Qumu securities by Qumu’s directors and executive
officers have changed since the amounts set forth in Synacor’s or
Qumu’s respective proxy statement for its 2019 annual meeting of
stockholders, such changes have been or will be reflected on
Statements of Change in Ownership on Form 4 filed with the SEC.
Additional information regarding the interests of such individuals
in the proposed merger will be included in the joint proxy
statement/prospectus relating to the proposed merger when it is
filed with the SEC. These documents (when available) may be
obtained free of charge from the SEC’s website at www.sec.gov,
Synacor’s website at www.synacor.com and Qumu’s website at
www.qumu.com. The contents of the websites referenced above are not
deemed to be incorporated by reference into the registration
statement or the joint proxy statement/prospectus.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200211005543/en/
Synacor Contact: FNK IR Rob Fink +1.646.809.4048
rob@fnkir.com
Meredith Roth VP, Marketing & Corporate Communications
Synacor +1.770.846.1911 mroth@synacor.com
Qumu Contact: Dave Ristow Chief Financial Officer Qumu
Corporation +1.612.638.9045 dave.ristow@qumu.com
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