And strengthening its digital adoption and
change management practice
MONTREAL, Feb. 1, 2022 /PRNewswire/ - Alithya Group inc.
(TSX: ALYA) (NASDAQ: ALYA) ("Alithya") is pleased to announce that
it has completed the acquisition of US-based Vitalyst, LLC
("Vitalyst") for a purchase price of up to US$50.2 million (C$64.1
million). Vitalyst is an award-winning Microsoft Gold
Partner providing best-in-class employee experience and
transformative change enablement via the on-demand,
subscription-based Adaptive Learning™ proprietary
platform.
Vitalyst accompanies Fortune 1000 companies in the adoption of
cloud-based, Microsoft business applications. Its more than 165
professionals currently support over 350 business applications for
over 400 clients that operate in more than 20 countries. Its
services are offered in over 10 languages and drive usage and
awareness of Microsoft applications, allowing organizations to
achieve the maximum return on their investment by enhancing user
proficiency and productivity. The North American Learning and
Development industry was over US$50
billion in 2020 and has continued to grow rapidly. The
unprecedented increase in the demand for teleworking and the
shortage of qualified talent is accelerating the need for employers
to provide their employees with the most efficient and agile way to
access virtual business application experts and tools in order to
accelerate the adoption of new cloud technologies.
Paul Raymond, President and
Chief Executive Officer, Alithya:
"I am proud to welcome
Vitalyst to the Alithya community. In Vitalyst, we found a highly
skilled team with a culture and vision in strong alignment with
Alithya's values and corporate objectives. Vitalyst's blue-chip
customer base, and its virtual Adaptive
Learning™ platform, provide strong bases for continued
success in the years to come. The impressive roster of Fortune 1000
clients that Vitalyst has supported, many for more than 25 years,
and its status as a Microsoft Partner-of-the-Year, are a testament
to the quality of its offering. In a world of growing reliance
on digital technologies and a shortage of qualified personnel, the
capacity to accelerate the development of the existing and future
workforce will be one of many strategic differentiators for Alithya
and its clients."
Russell Smith, President,
Alithya US:
"Vitalyst is a great addition to Alithya,
and I look forward to working with Barry and the
Vitalyst team. The Vitalyst experts will be able to
accelerate growth by tapping into our other global clients and,
conversely, add to our offerings for a variety of the business
applications we support. Their employee experience and
transformative change enablement expertise via an on-demand,
subscription-based Adaptive Learning™ proprietary
platform will now enable us to continue serving our clients, post
implementation, in order to help them accelerate the adoption and
impact of their digital transformation investments. The Adaptive
Learning™ platform is highly complementary to our
Microsoft and change management practices, helping clients to get
the most out of the technologies they implement and increase the
productivity of their people."
Barry O'Donnell,
Vitalyst:
"I am very excited for Vitalyst to be joining
Alithya, a growing world-class organization that also enjoys a
highly-valued Microsoft partnership. This represents an opportunity
for our existing clients to benefit from Alithya's Microsoft
expertise while enabling Alithya customers to leverage our
Adaptive Learning™ platform to accelerate their digital
transformation. This transaction also represents incredible career
opportunities for our people as they join one of the fastest
growing digital transformation leaders."
For the twelve-month period ended December 31, 2021, Vitalyst's preliminary results
were revenues of US$26.4 million
(C$33.7 million) and Adjusted
EBITDA(1) of US$10.1
million (C$12.9 million),
before any potential cost synergies.
(1)
|
Non-IFRS financial
measure. Please refer to the "Non-IFRS Measures" section at the end
of this press release.
|
Strategic Rationale
- Enables Alithya to strategically enter the enterprise learning
market through the acquisition of an award-winning Microsoft Gold
Partner with a 25+ year Microsoft relationship while strengthening
its digital adoption and change management practice.
- Allows Alithya to capitalize on the shift to remote and hybrid
work via Vitalyst's proprietary Adaptive
Learning™ platform.
- Vitalyst has established relationships with 25%+ of Fortune
1000 companies spanning a broad spectrum of industries.
- Enhances Alithya's revenue mix with a new high-margin
subscription-based, recurring, revenue stream.
- Vitalyst presents promising organic growth prospects and strong
cross-selling potential with Alithya's current offering and client
base.
Financial Highlights
- Acquisition of Vitalyst for an upfront purchase price of
US$49.2 million (C$62.8 million), including estimated IFRS 16
lease liabilities of US$3.2 million.
The agreement also includes a potential US$1
million earn-out payable after twelve months, subject to the
achievement of a profitability increase target.
- Over C$425 million in pro forma
revenues(2), and pro forma Adjusted
EBITDA(1)(2) estimated in the low
C$30 millions for the twelve-month
period ended September 30, 2021.
- Transaction immediately accretive, Vitalyst to represent close
to 40% of Alithya's combined pro forma Adjusted
EBITDA(1)(2) for the twelve-month period ended
September 31, 2021.
(1)
|
Non-IFRS financial
measure. Please refer to the "Non-IFRS Measures" section at the end
of this press release.
|
(2)
|
Pro forma calculations
also include R3D Conseil Inc. prior to the date of acquisition by
Alithya.
|
Acquisition Financing
The purchase price and related
transaction costs were funded through a combination of a
C$25 million private placement of
Class A subordinate voting shares, a C$7.5
million subordinated unsecured loan and availability under
Alithya's newly upsized C$125
million revolving credit facility, with details as
follows:
- Private Placement of Class A Subordinate Voting Shares:
Alithya issued on the date hereof 6,514,658 Class A subordinate
voting shares to Gestion MTRHP Inc., a corporation beneficially
owned by Pierre Karl Péladeau, and 1,628,664 Class A subordinate
voting shares to Investissement Québec, in both cases at an issue
price of C$3.07 per share, for
aggregate gross proceeds to Alithya of C$25
million.
- Subordinated Unsecured Loan: Alithya has increased its
existing subordinated unsecured loan with Investissement Québec by
C$7.5 million, resulting in a total
outstanding subordinated unsecured loan of C$17.5 million.
- Revolving Credit Facility: Alithya has entered into a
newly upsized C$125 million revolving
credit facility from a lending syndicate led by the Bank of
Nova Scotia and including
Desjardins Capital Markets and Bank of Montréal. Drawing under this
new facility will fund the balance of the purchase price.
Taking into consideration the acquisition, the pro forma total
net debt (including IFRS 16 lease liabilities) to last-twelve-month
pro forma Adjusted EBITDA(1)(2), as at September 30, 2021, stands at below 3.5 times,
with some subsequent deleveraging expected considering Vitalyst's
historical profitability.
Following the closing of the transaction, entities controlled by
Pierre Karl Péladeau (through Gestion MTRHP Inc. and through a
subsidiary of Québecor Inc.) will hold approximately 17.9% of
Alithya's total issued and outstanding shares and 10.4% of the
voting rights attached to Alithya's issued and outstanding shares,
and Investissement Québec will hold approximately 9.7% of Alithya's
total issued and outstanding shares and 5.7% of the voting rights
attached to Alithya's issued and outstanding shares.
Given that Gestion MTRHP Inc. is an entity controlled
by Pierre Karl Péladeau and that Mr. Péladeau is a director of
Alithya, the private placement to Gestion MTRHP Inc. is a
"related party transaction" for the purposes of Multilateral
Instrument 61-101 Protection of Minority Security Holders in
Special Transactions ("MI 61-101"). Alithya relied on the
exemptions from the valuation and minority approval requirements
contained in paragraphs 5.5(a) and 5.7(a) of MI 61-101. Mr.
Péladeau did not participate in the deliberations of the board of
directors of Alithya relating to the private placement, and he
abstained from voting on such matter.
(1)
|
Non-IFRS financial
measure. Please refer to the "Non-IFRS Measures" section at the end
of this press release.
|
(2)
|
Pro forma calculations
also include R3D Conseil Inc. prior to the date of acquisition by
Alithya.
|
Financial Advisors
Scotiabank acted as sole financial
advisor on the acquisition for Alithya and as agent on the equity
private placement. G2 Capital Advisors served as the exclusive
sell-side advisor to Vitalyst.
Conference Call Information
Alithya will hold a
conference call and live webcast to discuss the transaction on
Tuesday, February 1, 2022,
at 9:00 a.m. Eastern time. The call is for financial analysts
and investors. Participants can hear the conference call by dialing
(888) 440-2069, passcode 3403543. The webcast is accessible
at https://www.icastpro.ca/d2iupf.
About Alithya
Alithya is a North American leader in
strategy and digital transformation, employing a dedicated and
highly skilled workforce of 3,600 professionals in Canada, the United
States, and Europe. Since its founding in 1992,
Alithya's capacity, size, and capabilities have continuously
evolved, guided by a long-term strategic vision to become the
trusted advisor of its clients. The company's integrated offer is
based on four pillars of expertise: business strategies,
enterprise cloud solutions, application services, and data and
analytics. Alithya deploys leading-edge solutions, services,
and skills as one of the most prominent consulting firms,
driving successful digital change as a trusted advisor to customers
in a variety of sectors, including financial services,
manufacturing, renewable energy, telecommunications, transport
and logistics, professional services, healthcare,
government, and beyond.
Forward-Looking Statements
This press release contains statements that may constitute
"forward-looking information" within the meaning of applicable
Canadian securities laws and "forward-looking statements" within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995 and other applicable U.S. safe harbours (collectively
"forward-looking statements"). Statements that do not exclusively
relate to historical facts, as well as statements relating to
management's expectations regarding the future growth, results of
operations, performance and business prospects of Alithya, and
other information related to Alithya's business strategy and future
plans, or which refer to the characterizations of future events or
circumstances represent forward-looking statements. Such statements
often contain the words "anticipates," "expects," "intends,"
"plans," "predicts," "believes," "seeks," "estimates," "could,"
"would," "will," "may," "can," "continue," "potential," "should,"
"project," "target," and similar expressions and variations
thereof, although not all forward-looking statements contain these
identifying words.
Forward-looking statements are presented for the sole purpose of
assisting investors and others in understanding Alithya's
objectives, strategies and business outlook as well as its
anticipated operating environment and may not be appropriate for
other purposes. Although management believes the expectations
reflected in Alithya's forward-looking statements were reasonable
as at the date they were made, forward-looking statements are based
on the opinions, assumptions and estimates of management and, as
such, are subject to a variety of risks and uncertainties and other
factors, many of which are beyond Alithya's control, and which
could cause actual events or results to differ materially from
those expressed or implied in such statements. Such risks and
uncertainties include but are not limited to the possible failure
to realize anticipated benefits of the transaction, including
potential synergies, the integration of Vitalyst's business, the
loss of certain key personnel and clients of Vitalyst, potential
undisclosed costs or liabilities associated with the transaction
and other risks and uncertainties discussed in the section titled
"Risks and Uncertainties" of Alithya's Management's Discussion and
Analysis for the quarter ended September 30,
2021 and Management's Discussion and Analysis for the year
ended March 31, 2021, as well as in
Alithya's other materials made public, including documents filed
with Canadian and U.S. securities regulatory authorities from time
to time and which are available on SEDAR at www.sedar.com and EDGAR
at www.sec.gov. Additional risks and uncertainties not currently
known to Alithya or that Alithya currently deems to be immaterial
could also have a material adverse effect on its financial
position, financial performance, cash flows, business or
reputation.
Forward-looking statements contained in this press release are
qualified by these cautionary statements and are made only as of
the date of this press release. Alithya expressly disclaims any
obligation to update or alter any forward-looking statements, or
the factors or assumptions underlying them, whether as a result of
new information, future events or otherwise, except as required by
applicable law. Investors are cautioned not to place undue reliance
on forward-looking statements since actual results may vary
materially from them.
Non-IFRS Measures
This press release includes certain measures which have not been
prepared in accordance with IFRS. Adjusted EBITDA is a non-IFRS
measure. This measure does not have any standardized meaning
prescribed by IFRS and are therefore unlikely to be comparable to
similar measures presented by other companies. This measure should
be considered as supplemental in nature and not as a substitute for
the related financial information prepared in accordance with IFRS.
Please refer to the Management's Discussion and Analysis for the
quarter ended September 30, 2021 for
a description of such measure, a reconciliation to the most
directly comparable IFRS financial measure and calculated
amounts.
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SOURCE Alithya