Absolute Software to be Acquired by Crosspoint Capital Partners for $1.18 Billion
- The transaction is valued at $891.5 million (US$657 million) exclusive of Absolute's debt
- The purchase price represents a premium of approximately 34% over Absolute's closing share price of US$58 on May 10, 2023
Vancouver, BC, May 11, 2023--(T-Net)--Absolute Software (NASDAQ: ABST) (TSX: ABST), a provider of self-healing, intelligent security solutions, today announced it has entered into an Arrangement Agreement with funds affiliated with Crosspoint Capital Partners, L.P., whereby Crosspoint has agreed to acquire all of the issued and outstanding common shares of the Company.
Under the terms of the Arrangement Agreement, Absolute shareholders will receive US$11.50 per Common Share in cash on completion of the Acquisition, corresponding to an enterprise value of approximately $1.18 Billion (US$870 million), inclusive of the debt.
The cash consideration represents a premium of 34% and 38% to the closing price and 30-day volume-weighted average price, respectively, of the Common Shares on the Nasdaq on May 10, 2023.
Crosspoint Capital is a team of world-class technology leaders, operators and investors who have dedicated their careers to building great companies. Crosspoint brings significant cybersecurity expertise that will help drive the Company's next phase of growth.
Greg Clark, Managing Partner, Crosspoint Capital Partners
"In the modern remote and hybrid work environment, maintaining device integrity and protection is more difficult than ever," said Greg Clark, Managing Partner of Crosspoint Capital Partners. "We are impressed with how Absolute has built upon its asset visibility and control heritage and expanded into solutions that provide endpoint resilience and the reliable access needed in today's hybrid work environments. We look forward to partnering with Christy and the Absolute team as they continue to deliver highly differentiated solutions to the market."
Christy Wyatt, Chief Executive Officer, Absolute
"For the past five years, our focus has been on creating the industry's only truly self-healing security platform centered on resilience," said Christy Wyatt, President and CEO of Absolute. "By partnering with Crosspoint, a proven cybersecurity investor with a track record in building growth companies, we are delivering immediate cash value to our shareholders, while positioning Absolute for an exciting future across all key stakeholders, including Absolute team members throughout the organization, our OEM partners and reseller network, and our more than 21,000 customers around the world."
"This transaction with Crosspoint validates the attractive business and growth profile established by Christy and her team and delivers a solid return to the shareholders who have supported Absolute," said Dan Ryan, Chairman of Absolute's Board of Directors. "By partnering with a proven private software investor, Absolute will be in a stronger position both strategically and with respect to its capital structure to achieve its growth potential."
A special committee comprised entirely of independent directors of the Company and advised by its financial advisor and by counsel unanimously recommended entering into the Arrangement Agreement to the board of directors of the Company.
The Board has evaluated the Arrangement Agreement with the Company's management, legal and financial advisors and, following the receipt and review of the unanimous recommendation from the Special Committee, the Board has unanimously approved the Acquisition and determined that the Acquisition is in the best interest of the Company.
The Board has resolved to recommend that the Company's securityholders vote in favour of the Acquisition.
In anticipation of a potential transaction, Absolute amended the terms of its senior credit agreement with Benefit Street Partners (BSP). A further amendment was subsequently made to facilitate entry by Absolute into the Arrangement Agreement. Absolute says it will have to pay a fee to Benefit Street Partners in consideration for the amendments to the credit agreement upon consummation of the Acquisition.
About Crosspoint Capital Partners
Crosspoint Capital Partners is a private equity investment firm focused on the cybersecurity, privacy and infrastructure software markets. Crosspoint has assembled a group of highly successful operators, investors and sector experts to partner with foundational technology companies and drive differentiated returns. Crosspoint has offices in Menlo Park, CA and Boston, MA.
About Absolute Software
Absolute Software (NASDAQ: ABST) (TSX: ABST) is the only provider of self-healing, intelligent security solutions. Embedded in more than 600 million devices, Absolute is the only platform offering a permanent digital connection that intelligently and dynamically applies visibility, control and self-healing capabilities to endpoints, applications, and network connections - helping customers to strengthen cyber resilience against the escalating threat of ransomware and malicious attacks.
Trusted by nearly 20,000 customers, G2 recognized Absolute as a Leader for the thirteenth consecutive quarter in the Spring 2023 Grid® Report for Endpoint Management and as a Leader for the third consecutive quarter in the Grid Report for Zero Trust Networking.
Additional Details on the Acquisition
The Acquisition, which was approved unanimously by the Board, is to be carried out by way of a statutory court-approved plan of arrangement under the Business Corporations Act (British Columbia), and will require the approval of: (i) two-thirds of the votes cast by shareholders of the Company at a special meeting of the securityholders of the Company (the "Special Meeting"); (ii) two-thirds of the votes cast by shareholders and holders of incentive awards, voting together as single class, at the Special Meeting and (iii) a simple majority of the votes cast by shareholders of the Company at the Special Meeting, excluding votes from certain shareholders, as required under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Special Meeting is expected to be held in late June.
The Company's directors and senior executive officers, holding an aggregate of approximately 1.52% of the outstanding Common Shares, have each entered into support and voting agreements to vote their shares in favour of the Acquisition. In addition to securityholder approval, the completion of the Acquisition will be subject to court and regulatory approvals and clearances, as well as other customary closing conditions. Subject to the satisfaction of such conditions, the Acquisition is expected to be completed during the second half of 2023.
Upon completion of the Acquisition, the Common Shares will no longer be listed on any public market and the Company will cease to be a reporting issuer under Canadian and U.S. securities laws.
Further details with respect to the Acquisition will be included in the management information circular (the "Circular") to be mailed to security holders in connection with the Special Meeting. A copy of the Arrangement Agreement will be filed on the Company's SEDAR profile and with the U.S. Securities and Exchange Commission and will be available for viewing at www.sedar.com and www.sec.gov.
Advisors and Counsel
Perella Weinberg Partners is serving as Absolute's financial advisor in connection with the Acquisition, with Raymond James Ltd. also providing financial advice to the Special Committee. The Company's legal advisors in connection with the Acquisition are Cooley LLP and Blake, Cassels & Graydon, LLP.
Ropes & Gray and Stikeman Elliott acted as legal advisors and Barclays acted as financial advisor to Crosspoint.
No Offer or Solicitation
This document does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in any jurisdiction pursuant to or in connection with the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law.
Dividend
As previously declared, Absolute will be paying a dividend of CAD $0.08 per share on its Common Shares, payable in cash on May 24, 2023 to shareholders of record at the close of business on May 11, 2023. As a part of the definitive agreement, Absolute will suspend its dividend going forward.
Additional Information about the Acquisition and Where to Find It
Further details regarding the terms of the Acquisition are set out in the Arrangement Agreement, which will be publicly filed on Absolute's SEDAR profile at www.sedar.com and EDGAR profile at www.sec.gov. Additional information regarding the terms of the Arrangement Agreement, the background to the Acquisition, the rationale for the recommendations made by the Special Committee and the Board and how Absolute's securityholders can participate in and vote at the Special Meeting to be held to consider the Acquisition will be provided in the Circular which will be mailed to securityholders of the Company and also filed on Absolute's SEDAR profile at www.sedar.com and EDGAR profile at www.sec.gov. Securityholders are urged to read these and other relevant materials when they become available.
©2023 Absolute Software Corporation. All rights reserved. ABSOLUTE, the ABSOLUTE logo, and NETMOTION are registered trademarks of Absolute Software Corporation or its subsidiaries. Other names or logos mentioned herein may be the trademarks of Absolute or their respective owners. The absence of the symbols ™ and ® in proximity to each trademark, or at all, herein is not a disclaimer of ownership of the related trademark.
Forward-Looking Statements
This press release contains certain forward-looking statements and forward-looking information, as defined under applicable securities laws, including, without limitation, the U.S. Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements"), which relate to future events or Absolute's future business, operations, and financial performance and condition. [ MORE ]
Forward-Looking Statements
This press release contains certain forward-looking statements and forward-looking information, as defined under applicable securities laws, including, without limitation, the U.S. Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements"), which relate to future events or Absolute's future business, operations, and financial performance and condition.
Forward-looking statements normally contain words like "will", "intend", "anticipate", "could", "should", "may", "might", "expect", "estimate", "forecast", "plan", "potential", "project", "assume", "contemplate", "believe", "shall", "scheduled", and similar terms and, within this press release, include, without limitation: the information under the heading "F2022 Financial Outlook", statements regarding the NetMotion acquisition and integration, statements regarding Absolute's market opportunity and ability to accelerate growth, and any statements (express or implied) respecting: Absolute's future plans, strategies, and objectives, including plans, strategies, and objectives arising out of the COVID-19 pandemic and the NetMotion acquisition; projected revenues, expenses, margins, and profitability; anticipated strategic, operational, and financial benefits and synergies of the NetMotion acquisition and integration; future trends, opportunities, challenges, and growth in Absolute's industry; the impacts of the COVID-19 pandemic on Absolute's business, operations, prospects, and financial results; Absolute's ability to grow revenue by selling to new customers and increasing subscriptions with existing customers; Absolute's ability to renew customers' subscriptions; Absolute's ability to maintain and enhance its competitive advantages within its industry and in certain markets; the maintenance and development of Absolute's PC OEM and other partner networks; existing and new product functionality and suitability; Absolute's product and research and development strategies and plans; increases to brand awareness and market penetration; foreign operations and growth; and other aspects of Absolute's operations or operating results.
Forward-looking statements, including the F2022 Financial Outlook, are provided as of the date hereof for the purpose of presenting information about management's current expectations and plans relating to the future and allowing investors and others to get a better understanding of our anticipated financial position, results of operations, and operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable, and appropriate in the circumstances. The material expectations, assumptions, and other factors used in developing the forward-looking statements set out herein include or relate to the following, without limitation: Absolute will be able to successfully execute its plans, strategies, and objectives; Absolute will be able to successfully manage cash flow, operating expenses, interest expenses, capital expenditures, and working capital and credit, liquidity, and market risks; Absolute will be able to leverage its past, current, and planned investments to support growth and increase profitability; Absolute will be able to successfully integrate NetMotion's operations and realize the expected benefits to and synergies from Absolute from the acquisition; the Absolute-NetMotion combined company's financial profile will align with Absolute's forecasts; Absolute will be able to implement its plans, forecasts, and other expectations with respect to the NetMotion acquisition and realize expected synergies; Absolute will be able to successfully manage the impacts of COVID-19 on its business, operations, prospects, and financial results; there will continue to be a trend toward mobile computing and remote working and/or distance learning, in the short, medium, and/or long-term, and resulting demand for Absolute's solutions; Absolute will be able to grow revenue by selling to new customers and increasing subscriptions with existing customers at or above the rates currently anticipated; Absolute will be able to renew customers' subscriptions efficiently and cost effectively; Absolute will maintain and enhance its competitive advantages within its industry and certain markets; Absolute will keep pace with or outpace the growth, direction, and technological advancement in its industry; industry data and projections are accurate and reliable; Absolute will be able to adapt its technology to be compatible with changes to existing and new PC and other device operating systems; Absolute will be able to maintain and develop its PC OEM and other channel partner networks; Absolute's current and future (if any) PC OEM partners will continue to permit embedding of its firmware technology and/or provide distribution and resale support; Absolute's business development strategies and plans will be successful as currently expected; Absolute will be able to maintain or grow its sales to education customers; Absolute's existing and new products will function as intended and will be suitable for the intended end users; Absolute will be able to design, develop, and release new products, features, and services and enhance its existing products and services; Absolute will be able to protect against the improper disclosure of data it may process, store, and/or manage; Absolute's revenues will not become subject to increased seasonality; Absolute will meet its commitments under and remain in compliance with its term loan facility; future financing will be available to Absolute on favourable terms, if and when required; Absolute will be in a financial position to issue dividends in the future; fluctuations in applicable tax rates, foreign exchange rates, and interest rates will not have a material impact on Absolute; certain tax credits will remain or become available to Absolute; Absolute will be able to attract and retain key personnel; Absolute will be successful in its brand awareness and other marketing initiatives; Absolute will be able to maintain and enhance its intellectual property portfolio; Absolute's protection of its intellectual property is and will be sufficient and its technology does not and will not materially infringe third-party intellectual property rights; Absolute will be able to obtain any necessary third-party licenses on favourable terms; Absolute will not become involved in material litigation or subject to material adverse judgments, damages awards, or regulatory sanctions; Absolute will be able to successfully manage the additional expenses, regulatory obligations, and legal exposures resulting from its recent SEC registration and Nasdaq listing; Absolute will not face any material unexpected costs related to product liability or warranties; foreign jurisdictions will not impose unexpected risks; and economic and market conditions (including, without limitation, as affected by the COVID-19 pandemic) will not impose unexpected risks or challenges.
Although management believes that the forward-looking statements herein are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Absolute's business, including the following risks (as more particularly described and referred to in the "Risk and Uncertainties" section of Absolute's Q1 F2022 MD&A: that Absolute may not be able to accurately predict its rate of growth and profitability; Absolute's dependence on PC OEMs for embedding its firmware technology; Absolute's reliance on its PC OEM and other distribution, resale, and other channels; risks related to the COVID-19 pandemic and its impact on Absolute; that Absolute may not be able to successfully integrate NetMotion's operations; that Absolute may be unable implement its plans, forecasts, and other expectations for the NetMotion acquisition as anticipated, or at all, to realize the expected synergies from the NetMotion acquisition; that the Absolute-NetMotion combined company will not have the projected financial profile and will not experience the expected financial benefits and synergies; that the NetMotion acquisition and integration will disrupt Absolute's business; that Absolute may be unable to attract new customers or maintain its existing customer base or grow or upgrade the services provided to these customers; that customers may not renew or expand their existing commercial relationship with Absolute; that Absolute may be unable to adapt its technology to be compatible with new operating systems; that Absolute's business development activities will not advance and deliver the benefits as currently anticipated; that changing buying patterns in the education vertical may adversely impact Absolute's business; that changing contracting or fiscal policies of government organization may adversely affect Absolute's business and operations; risks relating to the evolving nature of the market for Absolute's products; that Absolute's software services may contain errors, vulnerabilities, or defects; that Absolute could suffer security breaches impacting the data that Absolute processes and otherwise handles; other risks associated with data security, privacy controls, and hacking; that Absolute's reputation may be damaged, and its financial results negatively affected, if its internal networks, systems, or data are perceived to have been compromised; that customers may expose Absolute to potential violations of applicable privacy laws; that Absolute's focus on larger enterprise customers could result in greater costs, less favourable commercial terms, and other adverse impacts to Absolute; risks associated with any failure by Absolute to successfully promote and protect its brands; risks associated with cyclical business impacts on Absolute; Absolute may fail to meet its commitments under or remain in compliance with its term loan facility, which could allow the lenders to accelerate the repayment of the debt; future financing that may be required may not be available on favourable terms; risks associated with the competition Absolute faces within its industry; that industry data and projections are inaccurate and unreliable; that Absolute's research and development efforts may not be successful; risks resulting from interruptions or delays from third-party hosting facilities; that Absolute's business may suffer if it cannot continue to protect its intellectual property rights; that Absolute may be unable to obtain patent or other proprietary or statutory protection for new or improved technologies or products; risks related to Absolute's technology incorporating certain "open source" software; that Absolute may be unable to maintain technology licenses from third parties; risks related to fluctuating foreign exchange rates; that the price of Absolute's common shares may be subject to wide fluctuations; risks related to Absolute's recent SEC registration and Nasdaq listing; that Absolute is reliant on its key personnel; that Absolute may be subject to litigation or other dispute resolution from time-to-time; that Absolute may become subject to material adverse judgments, damages awards, or regulatory sanctions; risks related to Absolute's foreign operations; risks related to Absolute's amortization of revenue over the term of its customer subscriptions; risks related to Absolute's reliance on its reseller and other partners for billings; that Absolute may reduce or eliminate its periodic dividend payments in the future; income tax related risks; that Absolute may not currently have or maintain adequate insurance coverages for the risks associated with its business; that Absolute may become subject to product liability claims; and risks related to economic and political uncertainty.
Additional material risks and uncertainties applicable to the forward-looking statements herein include, without limitation, unforeseen events, developments, or factors causing any of the aforesaid expectations, assumptions, and other factors ultimately being inaccurate or irrelevant. Many of these factors are beyond the control of Absolute.
All forward-looking statements included in this press release are expressly qualified in their entirety by these cautionary statements. The forward-looking statements contained in this press release are made as at the date hereof and Absolute undertakes no obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws.
|