Synchronoss to Double Down on Communications
& Media Business
Divest Non-Core Assets Through Agreement to
Sell Intralinks Business to Siris
Improve Balance Sheet Strength, Cash Position
and Potential Profitability Through Siris Investment
Synchronoss Technologies, Inc. (NASDAQ:SNCR) (the "Company" or
“Synchronoss”), the leader in mobile cloud innovation for mobile
carriers, enterprises, retailers and OEMs globally, today announced
that its Board of Directors (the “Board”) has concluded its review
of strategic alternatives and determined that the best approach for
the Company to achieve its goal of maximizing shareholder value is
to focus on its core Communications & Media (“Comms &
Media”) business, divest non-core assets and improve the Company’s
balance sheet strength, cash position and potential profitability.
Synchronoss’ core Comms & Media business, consisting of both
predictable, mature segments and long-term growth opportunities, is
an industry leader with longstanding relationships with leading
communications and media companies around the world. The Company
posted a presentation regarding this announcement that can be found
on the Investor Relations section of the Synchronoss website.
Under the terms of the definitive agreements, investment funds
affiliated with Siris Capital Group, LLC (“Siris”) will acquire all
of the stock of the Company’s wholly-owned subsidiary, Intralinks
Holdings, Inc., for approximately $1 billion in consideration and
make an investment in convertible preferred equity of Synchronoss
in an amount of $185 million. Siris’ investment would initially be
convertible into approximately 19.8% of Synchronoss’ common stock.
The sale of Intralinks is expected to close in mid-November 2017;
the sale of the preferred stock is expected to close in the first
quarter of 2018. Both transactions are subject to closing
conditions.
“As part of the review of strategic alternatives, the Board
considered all elements of our businesses, and concluded that the
best approach to maximizing shareholder value is to concentrate on
our core Comms & Media business,” said Stephen Waldis, Founder,
Chairman and Chief Executive Officer of Synchronoss. “These
transactions would provide Synchronoss with a strong balance sheet
and the capital flexibility to pursue a more focused business
strategy that builds on our existing footprint in Cloud, Messaging,
and Digital Transformation while executing on key growth vectors in
each of these areas. We believe that we will be well-positioned
following this transaction to manage the predictable, mature
business lines in Comms & Media and invest in the business for
growth and expansion.”
Following the completion of the transactions, Synchronoss plans
to advance its position as a leading and trusted technology
solutions provider to communications and media companies, aligning
the latest products and solutions with critical business
initiatives and outcomes. The Company’s industry-leading customers
include Tier 1 carrier and cable provider customers such as
AT&T, Comcast, Frontier Communications, Verizon Wireless,
SoftBank and Sprint. Following completion of the transactions,
Synchronoss will have approximately 1,500 employees around the
world.
As part of the strategic review, Synchronoss determined it will
focus on three core product segments:
- Cloud: Synchronoss sees highly
promising opportunities to leverage its existing relationship with
Verizon to extend its cloud relationship, innovate product features
and value, and pursue new revenue streams. The Company is also
focused on executing its identified international growth
opportunities with revamped products.
- Messaging: The messaging
platform is a leader in white label email solutions with a highly
developed multi-channel messaging solution. The Company is
well-positioned for the next-wave evolution of messaging
monetization and has identified opportunities in U.S. and Asian
markets.
- Digital Transformation: The
Company is a core solutions provider to carrier consumer customers.
Synchronoss continues to see strong cash flow generation, new
customer acquisitions, including a recently-signed new contract
with Sprint, and a healthy pipeline of additional growth
opportunities.
Synchronoss remains committed to serving its leading
communications and media customers globally, with an emphasis in
its core markets in North America, Europe and an expanded presence
in Asia. In particular, Japan continues to be a key market with a
variety of near-term opportunities for the Company.
Mr. Waldis continued, “We plan to use the proceeds from the
Intralinks transaction to retire term loan debt and use the Siris
$185 million investment to drive future growth opportunities in the
Company’s Communications and Media business.”
“We have tremendous confidence in the future of Synchronoss and
look forward to working collaboratively with the company as it
transitions back to its core focus of providing mission critical
solutions to communications and media customers,” said Frank Baker,
co-founder and managing partner of Siris. “We are also excited to
acquire Intralinks and see it reemerge as an independent company
focused exclusively on serving financial services and enterprise
customers with virtual data room and highly-secure collaboration
solutions.”
Terms of Agreements
The acquisition of the Company’s Intralinks business will be
made pursuant to a share purchase agreement between Synchronoss and
Siris, under which Synchronoss has agreed to sell its wholly-owned
subsidiary, Intralinks Holdings, Inc., to Siris for consideration
consisting of cash in the amount of approximately $977 million and
an additional contingent payment of up to $25 million in cash.
Synchronoss previously acquired Intralinks on January 19, 2017 for
a purchase price of approximately $821 million. Upon the completion
of the transaction, Leif O’Leary, the current Executive Vice
President of Strategic Financials for Synchronoss, is expected to
serve as Chief Executive Officer of Intralinks.
The Siris convertible preferred equity investment in Synchronoss
in the amount of $185 million is comprised of cash and stock. The
stock portion consists of 5,994,667 shares of Synchronoss common
stock that Siris previously purchased. The preferred stock will be
convertible into shares of common stock at an initial conversion
price of $18.00 per share, provided that the number of shares of
common stock issuable upon conversion shall initially be capped at
19.9% of Synchronoss’s issued and outstanding common stock.
In the event the convertible preferred equity investment is
terminated, Siris has the right to cause Synchronoss to repurchase
from Siris, at a purchase price of $14.56 per share, some or all of
the 5,994,667 shares of Synchronoss common stock that Siris
currently holds.
Approvals and Closing
The transactions have been unanimously approved by Synchronoss’
Board of Directors. The sale of Intralinks is expected to close in
mid-November 2017; the sale of the preferred stock is expected to
close in the first quarter of 2018. Both transactions are subject
to closing conditions, including the expiration or termination of
the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act and other foreign antitrust regulatory
approvals.
Advisors
Goldman Sachs & Co. and PJT Partners are serving as
financial advisors to Synchronoss, and Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP is acting as its legal
counsel. Evercore Partners, Macquarie Capital, Moelis & Company
LLC, and RBC Capital Markets are acting as financial advisors to
Siris. Wachtell, Lipton, Rosen & Katz is acting as corporate
counsel to Siris and Greenberg Traurig, LLP is acting as financing
counsel to Siris in connection with the transactions.
About Synchronoss Technologies, Inc.
Synchronoss (NASDAQ: SNCR) is an innovative software company
that helps both service providers and enterprises realize and
execute their goals for mobile transformation now. Our simple,
powerful and flexible solutions serve millions of mobile
subscribers and a large portion of the Fortune 500 worldwide today.
For more information, visit us at www.synchronoss.com.
About Siris Capital Group, LLC | Siris Capital
Siris is a leading private equity firm focused on making control
investments in data, telecommunications, technology and
technology-enabled business service companies. Integral to Siris’
investment approach is its partnership with exceptional senior
operating executives, or Executive Partners, who work with Siris to
identify, validate and operate investment opportunities. Their
significant involvement allows Siris to partner with management to
add value both operationally and strategically. To learn more,
visit us at www.siriscapital.com.
Forward-looking Statements
Certain statements contained in this press release are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements include, but are not limited to, plans, objectives,
expectations and intentions and other statements contained in this
report that are not historical facts, including statements
regarding our exploration and evaluation of strategic alternatives
and statements identified by words such as “expects,”
“anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” “outlook” or words of similar meanings. These
statements are based on the Company’s current expectations and
beliefs and various assumptions. There can be no assurance that the
Company will realize these expectations or that these beliefs will
prove correct. Numerous factors, many of which are beyond the
Company’s control, could cause actual results to differ materially
from those expressed as forward-looking statements. These factors
include, but are not limited to, the risk that the proposed
transactions may not be completed in a timely manner, or at all;
the failure to satisfy the conditions to the consummation of the
proposed transactions, including the risk that a regulatory
approval that may be required for the proposed transactions is not
obtained, or could only be obtained subject to conditions that are
not anticipated; the occurrence of any event, change or other
circumstance that could give rise to the termination of the
proposed transaction agreements; the effect of the announcement or
pendency of the proposed transactions on the Company’s business
relationships, operating results, and business generally; the risk
that revenue opportunities, cost savings, synergies and other
anticipated benefits from the proposed transactions may not be
fully realized or may take longer to realize than expected; risks
related to the equity and debt financing and related guarantee
arrangements entered into in connection with the proposed
transactions; risks regarding the failure to obtain the necessary
financing to complete the proposed transactions; risks that the
proposed transactions disrupt current plans and operations of the
Company; risks related to diverting management’s attention from the
Company’s ongoing business operations; risks related to the outcome
of any legal proceedings that may be instituted against the
Company, its officers or directors related to the proposed
transactions; risks associated with the ongoing and uncompleted
nature of the Company’s accounting review; fluctuations in the
Company’s financial and operating results; integration of the
Company’s Intralinks business and execution of the Company’s cost
reduction plan; the Company’s substantial level of debt and related
obligations, including interest payments, covenants and
restrictions; uncertainty regarding increased business and renewals
from existing customers; the dependence of the Company’s Intralinks
business on the volume of financial and strategic business
transactions; disruptions to the implementation of the Company’s
strategic priorities and business plan caused by changes in the
Company’s senior management team; customer renewal rates and
attrition; customer concentration; the Company’s ability to
maintain the security and integrity of the Company’s systems;
foreign currency exchange rates; the financial and other impact of
previous and future acquisitions; competition in the enterprise and
mobile solutions markets; the Company’s ability to retain and
motivate employees; technological developments; litigation and
disputes and the costs related thereto; unanticipated changes in
the Company’s effective tax rate; uncertainties surrounding
domestic and global economic conditions; other factors that are
described in the “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” sections
of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2016, which is on file with the SEC and available on
the SEC’s website at www.sec.gov. Additional factors may be
described in those sections of the Company’s Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2017, June 30, 2017 and
September 30, 2017 to be filed with the SEC as soon as practicable.
The Company does not undertake any obligation to update any
forward-looking statements contained in this press release as a
result of new information, future events or otherwise.
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Investor and Media:Synchronoss Technologies, Inc.Investor
Relations+1 800-575-7606investor@synchronoss.comorJoele Frank,
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