- Combines two leaders in small business
online products and services, creating a full suite of online
marketing tools and end-to-end solutions
- Expected to deliver immediate and
long-term financial benefit, with estimated fiscal 2015 combined
pro forma adjusted revenue of approximately $1.1 billion and pro
forma adjusted EBITDA of $350 million
- Expected to generate fiscal 2016
combined year over year growth in pro forma adjusted revenue of 10
percent to 12 percent, and approximately $400 million in pro forma
adjusted EBITDA
- Expected to enhance free cash flow
generation and accelerate delivery of long-term financial
targets
- Increases subscribers on a combined
basis to over 5 million
Endurance International Group Holdings, Inc. (NASDAQ:EIGI), and
Constant Contact, Inc. (NASDAQ:CTCT) today announced that the two
companies have entered into a definitive agreement under which
Endurance International will acquire all of Constant Contact’s
outstanding shares of common stock for $32.00 per share in cash,
valuing Constant Contact at approximately $1.1 billion. The value
represents a multiple of 12x 2015 estimated adjusted EBITDA,
including cash on its balance sheet. Including expected synergies,
this represents a multiple of 7x 2015 estimated adjusted EBITDA.
The offer represents a premium of approximately 23 percent over
Constant Contact’s closing price of $26.10 on October 30, 2015. The
transaction has been approved by the boards of directors of both
companies.
Benefits of the proposed transaction
include:
- Expansion of Endurance’s position as a
leader in the small business marketing space from web presence to
online marketing services;
- Extension of the company’s product
portfolio of solutions and integrated products for its millions of
subscribers through the addition of Constant Contact’s suite of
online marketing tools such as email marketing, events management,
social media integration, and contact management systems;
- Strengthening of Endurance’s core
capabilities by combining with Constant Contact’s competencies as a
trusted and distinct brand focused on product and subscriber
engagement; and
- Enhanced operational and financial
scale.
Importantly, the transaction brings together two long-standing
Massachusetts companies, aligning the shared foundation built on
the technology and talent of both.
“We couldn’t be more pleased to welcome Constant Contact to our
team and our family of brands. We have long admired Constant
Contact and its strong management team, and all that it has
accomplished in building a great product set, as well as building
an influential culture and team. Their focus on the customer and
product development complements our offerings for small business
services, and expands our ability to address the needs of SMBs. We
know that once small businesses have a web presence, they look for
other products and services that will help them to grow their
business. We see an opportunity to help our growing subscriber base
meet their goals through an integrated suite of solutions, and we
are excited to add this talented team to our roster,” said Hari
Ravichandran, president and chief executive officer of
Endurance.
“Our team has always been passionate about helping small
businesses do more business. Joining the Endurance family of brands
will allow us to extend our reach and be a better partner to small
businesses across the globe. We have long shared a parallel
path—from our focus on SMBs, to technology, to talent—and we
believe this transaction will build continued value for all
constituents,” said Gail Goodman, chief executive officer of
Constant Contact.
Financial & operational
impacts:
This transaction, combined with Endurance’s recent purchase of
its largest co-located data center from ACE Data Centers, is
expected to result in:
- Fiscal 2015 combined pro forma adjusted
revenue of approximately $1.1 billion
- Fiscal 2015 combined pro forma adjusted
EBITDA of approximately $350 million
- Fiscal 2016 combined pro forma adjusted
revenue growth of approximately 10 percent to 12 percent
- Fiscal 2016 combined pro forma adjusted
EBITDA of approximately $400 million
- Acceleration of the delivery of
long-term financial targets
- Subscriber base of over 5 million
paying subscribers
The transaction is expected to close during the first quarter of
2016, and is subject to Constant Contact shareholder approval, and
other customary closing conditions, including clearance under the
Hart-Scott-Rodino Antitrust Improvements Act. Constant Contact
shareholders will be asked to vote on the proposed transaction at a
special meeting of shareholders that will be held on a date to be
announced. Endurance expects to finance the transaction with fully
committed debt financing of $1.085 billion. The purchase price will
be paid entirely in cash to Constant Contact shareholders.
Cleary Gottlieb Steen & Hamilton LLP acted as legal advisor,
Goldman, Sachs & Co. acted as lead financial advisor, and Allen
& Company LLC and Credit Suisse also acted as financial
advisors for Endurance International Group. Latham & Watkins
LLP acted as legal advisor for Constant Contact. Morgan Stanley
& Co. LLC acted as lead financial advisor, and Raymond James
and Associates acted as a financial advisor for Constant
Contact.
For further information regarding the terms and conditions
contained in the definitive merger agreement, please refer to
Endurance’s and Constant Contact’s Current Reports on Form 8-K,
which will be filed with the Securities and Exchange Commission in
connection with this transaction.
Endurance International Group management will discuss this
transaction on the company’s previously scheduled third quarter
2015 financial results conference call and webcast, scheduled to
begin at 8:00 a.m. EST on Monday, November 2, 2015. To participate
on the live call, analysts and investors should dial (888) 734-0328
at least ten minutes prior to the call. Endurance International
Group will also offer a live and archived webcast of the conference
call, accessible from the Investor Relations section of the
company’s website at http://ir.endurance.com.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
including statements regarding the expected timing of the
completion of the acquisition of Constant Contact described in this
press release and the related debt financing; the expected benefits
of the transaction, including an increase in the combined
business’s subscriber base; the valuation of Constant Contact;
Endurance’s immediate and long-term financial expectations for the
combined business, including expected growth, pro forma adjusted
revenue and pro forma adjusted EBITDA, enhanced free cash flow
generation and ability to deliver or accelerate delivery of
long-term financial targets; expectations regarding Endurance’s and
Constant Contact’s full-year fiscal 2015 results; expectations
regarding fiscal 2016 performance of the combined business;
expectations regarding the amount, timing and nature of costs
synergies or savings resulting from the transaction; and the future
operation, direction and success of the Endurance and Constant
Contact businesses. These forward-looking statements include, but
are not limited to, plans, objectives, expectations and intentions
and other statements contained in this press release that are not
historical facts, and statements identified by words such as
“expects,” “anticipates,” “intends,” “plans,” “believes,” “see,”
“seeks,” “estimates,” “will,” “should,” “may,” “confident,”
“positions,” “look forward to,” and variations of such words or
words of similar meaning and the use of future dates. These
forward-looking statements reflect our current views about our
plans, intentions, expectations, strategies and prospects, which
are based on the information currently available to us and on
assumptions we have made. Although we believe that our plans,
intentions, expectations, strategies and prospects as reflected in
or suggested by those forward-looking statements are reasonable, we
can give no assurance that these plans, intentions, expectations or
strategies will be attained or achieved. Furthermore, actual
results may differ materially from those described in the
forward-looking statements and will be affected by a variety of
risks and factors that are beyond our control including, without
limitation, uncertainties as to the timing of the contemplated
transaction; uncertainties as to the approval of Constant Contact
stockholders required in connection with the contemplated
transaction; the possibility that a competing proposal will be
made; the possibility that Endurance may not receive the
anticipated financing or financing on the terms expected; the
possibility that the closing conditions to the contemplated
transaction may not be satisfied or waived, including that a
governmental entity may prohibit, delay or refuse to grant a
necessary regulatory approval; the effects of disruption of
Endurance’s current plans and operations caused by the announcement
of the contemplated transaction, which may cause Endurance’s stock
price to decrease or make it more difficult to maintain
relationships with employees, customers, vendors and other business
partners; the possibility that the business of Constant Contact may
suffer as a result of uncertainty surrounding the transaction or
that Constant Contact may be adversely affected by other economic,
business, legislative, regulatory and/or competitive factors; the
inability of Endurance and Constant Contact to retain key
personnel; the risk that stockholder litigation or other legal
proceedings in connection with the contemplated transaction may
affect the timing or occurrence of the contemplated transaction or
result in significant costs of defense, indemnification and
liability; the possibility of the transaction involving unexpected
costs, liabilities or delays; the possibility of any failure to
realize the intended benefits of the contemplated transaction,
including the inability to integrate Constant Contact’s and
Endurance’s business and operations or to realize the anticipated
synergies in the expected amount or within the anticipated time
frames or cost expectations or at all; the possibility that
Endurance’s and Constant Contact’s estimated combined or standalone
fiscal 2015 or preliminary fiscal 2016 guidance may differ from
expectations; other business effects, including the effects of
industry, economic or political conditions outside of the control
of the parties to the contemplated transaction; additional
expenditures of time and resources related to transaction costs,
charges and expenses; adverse impact on Endurance’s business from
increased indebtedness and the cost of servicing its debt; actual
or contingent liabilities; and other risks and uncertainties
discussed in Endurance’s and Constant Contact’s filings with the
SEC, including the “Risk Factors” sections of Endurance’s and
Constant Contact’s most recent Quarterly Reports on Form 10-Q for
the period ended June 30, 2015 and most recent Annual Reports on
Form 10-K for the year ended December 31, 2014. You can obtain
copies of Endurance’s and Constant Contact’s filings with the SEC
for free at the SEC’s website (www.sec.gov). If the transaction is
consummated, Constant Contact’s stockholders will cease to have any
equity interest in Constant Contact and will have no right to
participate in its earnings and future growth. Neither Endurance
nor Constant Contact assume any obligation to update any
forward-looking statements contained in this document as a result
of new information, future events or otherwise.
Non-GAAP Financial Measures
Adjusted EBITDA, pro forma adjusted revenue and pro forma
adjusted EBITDA as used herein are non-GAAP measurements that are
presented herein as a supplemental disclosure. As used herein,
adjusted EBITDA is defined as GAAP net income before income taxes,
interest income and other income, net, depreciation and
amortization, and stock-based compensation; pro forma adjusted
revenue reflects the arithmetic sum of Endurance’s expected revenue
and Constant Contact’s expected revenue for the applicable period,
in each case adjusted to exclude the impact of any fair value
adjustments to deferred revenue resulting from the acquisition of
Constant Contact; and pro forma adjusted EBITDA reflects the
arithmetic sum of Endurance’s and Constant Contact’s expected
adjusted EBITDA for the applicable period, after conforming both
adjusted EBITDA figures to Endurance’s methodology for determining
adjusted EBITDA, which is calculated as net income (loss) plus
(i) changes in deferred revenue, depreciation, amortization,
stock-based compensation expense, loss of unconsolidated entities,
net loss on sale of assets, expenses related to integration of
acquisitions and restructurings, transaction expenses and charges,
certain legal advisory expenses, interest expense and income tax
expense, less (ii) earnings of unconsolidated entities, net
gain on sale of assets and the impact of purchase accounting
related to reduced fair value of deferred domain registration
costs.
These pro forma figures do not represent “pro forma” amounts
determined in accordance with the SEC’s rules and regulations,
including Article 11 of Regulation S-X, do not reflect any pro
forma adjustments resulting from the proposed transaction, and
should not be taken to represent how Endurance would have performed
on a historical basis had Constant Contact’s operations been
included in the period presented, or how Endurance will perform in
any future period. These non-GAAP financial measures, as well as
the other information in this press release, should be read in
conjunction with Endurance’s and Constant Contact’s financial
statements filed with the SEC.
All information presented on a pro forma basis for fiscal years
2015 and 2016 is preliminary.
Additional Information About the Acquisition and Where to
Find It
This communication is being made in respect of the proposed
transaction involving Constant Contact and Endurance. A special
stockholder meeting will be announced soon to obtain stockholder
approval in connection with the proposed merger between Constant
Contact and Endurance. Constant Contact expects to file with the
SEC a proxy statement and other relevant documents in connection
with the proposed merger. The definitive proxy statement will be
sent or given to the shareholders of Constant Contact and will
contain important information about the proposed transaction and
related matters. INVESTORS OF CONSTANT CONTACT ARE URGED TO READ
THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT CONSTANT CONTACT,
ENDURANCE AND THE PROPOSED MERGER. Investors may obtain a free copy
of these materials (when they are available) and other documents
filed by Constant Contact with the SEC at the SEC’s website at
www.sec.gov, at Constant Contact’s website at
www.constantcontact.com or by sending a written request to Constant
Contact at 1601 Trapelo Road, Waltham, Massachusetts 02451,
Attention: Investor Relations Department.
Participants in the Solicitation
Constant Contact, Endurance, and their respective directors,
executive officers and certain other members of management and
employees may be deemed to be participants in soliciting proxies
from Constant Contact’s stockholders in connection with the
proposed merger. Information regarding Constant Contact’s and
Endurance’s directors and executive officers is set forth in their
respective definitive proxy statements for their respective 2015
Annual Meetings of Stockholders and their respective most recent
annual reports on Form 10-K. Information regarding other persons
who may, under the rules of the SEC, be considered to be
participants in the solicitation of Constant Contact’s stockholders
in connection with the proposed merger will be set forth in
Constant Contact’s definitive proxy statement for its special
stockholder meeting. Additional information regarding these
individuals and Constant Contact’s and Endurance’s respective
directors and executive officers and any direct or indirect
interests they may have in the proposed merger will be set forth in
the definitive proxy statement when and if it is filed with the SEC
in connection with the proposed merger.
About Endurance International Group
Endurance International Group is a publicly traded (NASDAQ:
EIGI) technology company that helps power small and medium-sized
businesses online. Through its proprietary cloud platform,
Endurance provides web presence solutions including web hosting,
eCommerce, eMarketing and mobile business tools to approximately
4.5 million subscribers around the globe. The company’s world-class
family of brands includes Bluehost, HostGator, iPage, Domain.com, A
Small Orange, MOJO Marketplace, BigRock and ResellerClub, among
others. Headquartered in Burlington, Massachusetts, Endurance
employs more than 2,700 people across the United States in Utah,
Texas, Washington and Arizona and in the United Kingdom, India,
Israel and Brazil. For more information on how Endurance can help
grow your business, visit endurance.com, follow us on Twitter
@EnduranceIntl and like us on Facebook at
www.facebook.com/EnduranceInternational.
Endurance International Group and the compass logo are
trademarks of The Endurance International Group, Inc. Other brand
names of Endurance International Group are trademarks of The
Endurance International Group, Inc. or its subsidiaries.
About Constant Contact®, Inc.
Constant Contact introduced the first email marketing tool for
small businesses, nonprofits, and associations in 1998. Today, the
company helps more than 650,000 customers worldwide find marketing
success through the only all-in-one online marketing platform for
small organizations. Anchored by our world-class email marketing
tool, Constant Contact helps small businesses drive repeat business
and find new customers. It features multi-channel marketing
campaigns (newsletters/announcements, offers/promotions, online
listings, events/registration, and feedback) combined with shared
content, contacts, and reporting; free award-winning coaching and
product support; and integrations with critical business tools –
all from a single login. The company’s extensive network of
educators, consultants/resellers, technology providers, franchises,
and national associations offer further support to help small
organizations succeed and grow. Through its Innovation Loft,
Constant Contact is fueling the next generation of small business
technology.
Constant Contact and the Constant Contact Logo are registered
trademarks of Constant Contact, Inc. All Constant Contact product
names and other brand names mentioned herein are trademarks or
registered trademarks of Constant Contact, Inc. All other company
and product names may be trademarks or service marks of their
respective owners.
(CTCT-F)
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151102005798/en/
Endurance Investor:Endurance International GroupAngela
White, (781) 852-3450ir@endurance.comorEndurance
Press:Endurance International GroupDani LaSalvia, (781)
852-3212press@endurance.comorConstant Contact
Investor:Constant ContactJeremiah Sisitsky, (339)
222-5740ir@constantcontact.comorConstant Contact
Press:Constant ContactErika Tower, (781)
482-7039pr@constantcontact.com
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