NEW YORK: SourceHOV, LLC (“SourceHOV”), Novitex Holdings, Inc. (“Novitex”) and Quinpario Acquisition Corp. 2 (Nasdaq: QPAC, QPACW and QPACU) (“Quinpario”), a publicly traded special purpose acquisition company, today announced that they will combine to create a leading industry-solutions provider for financial technology and business services, delivering mission critical, technology-enabled multichannel information services to over 3,500 blue-chip customers in 55 countries. The parties have entered into a definitive business combination agreement for the proposed transaction, which is expected to close during the second quarter of 2017.
Novitex, a North American provider of technology-driven managed services, is owned by certain funds managed by affiliates of Apollo Global Management, LLC (together with its consolidated subsidiaries, “Apollo”) (NYSE: APO). SourceHOV is majority owned by HandsOn Global Management, LLC (“HGM”) and affiliates, and provides Transaction Processing Solutions (“TPS”) and Enterprise Information Management (“EIM”) solutions.
The transaction is valued at approximately $2.8 billion, representing a 7.3x multiple of the projected 2017E pro forma EBITDA for the combined company of $385 million. The purchase price will be funded through a combination of $1.35 billion in new debt financing, cash from Quinpario, rollover equity and cash on hand at closing, including from equity financing. Shareholders of SourceHOV and Novitex are rolling 100 percent of the current equity, and will be the majority shareholders of the combined company. All proceeds from the Quinpario equity capital contribution will be used for deleveraging, to pay fees and expenses for the transaction, and for general corporate purposes.
The combined company is expected to have approximately $1.5 billion in revenue in 2017, adding substantial scale and offering a complementary set of platforms and services to enhance customer offerings. With technology-enabled services deeply embedded in more than 60 percent of the FORTUNE® 100, the combined company will be a core partner for the world’s largest financial services organizations, insurance payers, healthcare providers, law firms, government entities and commercial enterprises.
The merger positions the combined company for accelerated growth, leveraging technology platforms, service offerings and global delivery supported by more than 23,500 employees across the Americas, Europe and Asia. With expanded, innovative offerings for high-volume, mission-critical processes, the combination will provide integrated platform solutions, from data aggregation and workflow to exception management and outcome resolutions.
Ron Cogburn, chief executive officer of SourceHOV, commented, “We are excited about the possibilities the transaction will bring to the business services sector, as it positions us well for growth in our key markets. Our journey from people-intensive to technology-enabled services and our combination with Novitex fundamentally increases our scale, making us a more strategic partner to customers in their quest for digital transformation.”
John Visentin, executive chairman and chief executive officer of Novitex, added, “The combination of Novitex and SourceHOV supports our strategy of serving as an end-to-end provider of innovative cloud-enabled solutions in the document outsourcing industry. This combination allows us to further enhance our strategic focus in providing leading-edge, integrated enterprise information management services.”
The combined company will have a board of directors consisting of eight members, including three directors to be nominated by HGM, two directors to be nominated by Apollo and three independent directors.
The proposed transaction includes committed financing from Royal Bank of Canada (“RBC”) and Credit Suisse, which is subject to customary closing conditions. Credit Suisse and RBC Capital Markets and are also acting as financial advisors to Novitex. Rothschild Inc. and Morgan Stanley & Co. LLC are acting as financial advisors to SourceHOV. Moelis & Company LLC is acting as financial advisor to Quinpario, while Deutsche Bank Securities Inc. and Cantor Fitzgerald & Co. are acting as capital markets advisors. Willkie Farr & Gallagher LLP acted as legal advisor to SourceHOV, Akin Gump Strauss Hauer & Feld LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisors to Novitex, and Kirkland & Ellis LLP and Graubard Miller acted as legal advisors to Quinpario.
The transaction is subject to customary and other closing conditions, including regulatory approvals, receipt of approvals from Quinpario stockholders, and receipt of proceeds from debt and equity financing, which are more fully described in a Current Report on Form 8-K filed by Quinpario on or about the date hereof.
About SourceHOV SourceHOV is a global TPS and EIM leader, providing services and solutions for high-volume, mission-critical processes to blue chip customers across 55 countries, including majority of the FORTUNE® 100. SourceHOV comprises 16,000 employees and operates over 120 delivery centers across the Americas, Europe and Asia, offering scalable technology platforms, hosted on premise and/or in a cloud environment, to a wide range of industries including financial services, healthcare, public sector, insurance, and legal. SourceHOV is majority owned by HGM and its affiliated funds, with Delos Capital www.deloscap.comwww.sourcehov.com.
Novitex is a technology-based, managed services provider that offers a range of mail, print, communications and back office solutions. With a suite of offerings, Novitex manages and connects a document’s full life cycle, breaking down operational silos to create more efficient, cost-effective workflows. For nearly 30 years, FORTUNE 500®, Am Law 200® and federal clients have depended on Novitex to manage their business processes. Today, Novitex supports 400 clients across North America with its tech-driven, end-to-end solutions and 7,500 employees. For more information, please visit www.novitex.com.
About HandsOn Global Management
Headquartered in Santa Monica, California, HGM is a family office that holds controlling interests in technology-enabled service companies, leverages the operating experience of its partners and complements those investments with its ownership of big data mining, FinTech, InsurTech and HealthTech platforms. For more information, please visit www.hgmfund.com.