Key highlights:
- Softchoice Corporation, a Canadian software and cloud-focused
IT solutions provider, and World Wide Technology Holding Co., LLC,
a global technology solutions provider, combine via an all-cash
transaction
- Consideration of C$24.50 per share in cash, valuing Softchoice
at an enterprise value (“EV”) of approximately C$1.8 billion1
- Results in a total shareholder return of approximately 62%2 on
the Company’s initial public offering share price
- Provides immediate liquidity and certainty of value to the
Company’s shareholders and is not subject to any financing
condition
- Culmination of robust review process, with the oversight and
participation of a committee of independent directors and highly
qualified legal and financial advisors
- Shareholders representing 51.3% of Softchoice’s outstanding
shares have entered into voting support agreements in favour of the
Transaction
- Acquisition will add new capabilities to WWT’s software, cloud,
cybersecurity, and AI offerings to provide a comprehensive
solutions portfolio across the full spectrum of the digital
transformation journey
- Strengthens access to Commercial, Small and Medium business
customers while expanding WWT’s position in the U.S., Canada, and
around the world
- Highly complementary cultures of innovation and inclusion to
create impact for clients, colleagues and communities
Softchoice Corporation (“Softchoice” or the “Company”)
(TSX:SFTC) and World Wide Technology Holding Co., LLC (“World Wide
Technology” or “WWT”), a global technology solutions and services
provider, are pleased to announce that they have entered into an
arrangement agreement (the “Arrangement Agreement”) for Softchoice
to be acquired by WWT, via an all-cash transaction (the
“Transaction”), which values Softchoice at an enterprise value of
approximately C$1.8 billion. Shareholders, including each of the
directors and senior officers of Softchoice, which collectively
represent approximately 51.3% of Softchoice’s issued and
outstanding common shares, have entered into voting support
agreements pursuant to which such shareholders have agreed, among
other things, to support and to vote all shares held by them in
favour of the Transaction.
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Andrew Caprara, Softchoice President and Chief Executive Officer
commented on the announcement: “We are excited to join WWT. Its
scale and global reach, customer base of large organizations, and
industry leading infrastructure solutions are a perfect complement
to our software and cloud focused solutions, our Canadian presence,
and our strength in the North American mid-market. We also share
similar Great Place to Work® certified organizational cultures,
demonstrating an aligned passion for our people. I believe WWT is
the ideal partner for our customers and employees and I’m excited
about our future as a combined firm.”
Jim Kavanaugh, WWT Co-Founder and Chief Executive Officer noted:
“As the AI revolution reshapes industries and transforms businesses
worldwide, we are at the forefront of this change – leading by
empowering enterprises of all sizes to achieve better business
outcomes. Softchoice has been a transformative player in the IT
industry for over 35 years, and adding its complementary software,
cloud, cybersecurity and AI capabilities to WWT’s portfolio will
enable us to create even greater value for our clients striving to
achieve their digital transformation goals.”
David Steward, WWT Founder and Chairman added: “This acquisition
strengthens our access to Commercial, Small and Medium business
customers while expanding WWT’s position in the U.S., Canada, and
around the world. Given our shared mission and Great Place to Work®
designations, we will continue our commitment to building a culture
of innovation and inclusion to be a great place to work for
all.”
Transaction Highlights
Under the terms of the Arrangement Agreement, WWT, through an
affiliate, will acquire all the issued and outstanding common
shares of Softchoice for a price of C$24.50 per share, in cash,
valuing the Company at an EV of approximately C$1.8 billion. This
price represents premiums of approximately 14%, 32% and 19%, to the
closing price of the shares on the Toronto Stock Exchange (the
“TSX”) on December 30, 2024, the closing price of the shares on the
TSX on September 23, 2024, the day prior to commencement of the
review process, and the 90-day volume weighted average price3,
respectively. The purchase price is also above the 52-week high
closing price of the common shares as of December 30, 2024, and
represents a total shareholder return of approximately 62% to the
Company’s initial public offering price of C$20.00, as adjusted for
Softchoice’s historical dividend payments. Based on the Company’s
reported financial results for the trailing twelve months to
September 30, 2024, the Consideration values the Company at an EV
to Adjusted EBITDA multiple of ~13.2x.4
Transaction Details
The Company entered into the Arrangement Agreement based on the
unanimous approval of the Company’s board of directors (the
“Board”), following receipt of the unanimous recommendation of a
committee of independent directors (the “Special Committee”), and
having determined that the Transaction is in the best interests of
the Company and is fair to the shareholders of the Company. The
Arrangement Agreement was the result of a comprehensive
solicitation and negotiation process that was undertaken at arm’s
length with the oversight and participation of the Special
Committee advised by highly qualified legal and financial advisors.
See “Unanimous Board Approval” below.
The Transaction will be implemented by way of a statutory plan
of arrangement under the Canada Business Corporations Act.
Implementation of the Transaction will be subject to, among other
things, the approval at the special meeting of shareholders (the
“Shareholders’ Meeting”) of (i) at least 66 2/3% of the votes cast
by shareholders and (ii) a simple majority of the votes cast by
shareholders (excluding common shares held by certain senior
officers of the Company, whose shares are required to be excluded
pursuant to Multilateral Instrument 61-101 – Protection of Minority
Security Holders in Special Transactions). The Company intends to
hold the Shareholders’ Meeting in March 2025, where the Transaction
will be considered and voted upon by shareholders of record. The
Transaction is also subject to court approval and customary closing
conditions, including receipt of key regulatory approvals, is not
subject to any financing condition and, assuming the timely receipt
of all required key regulatory approvals, is expected to close in
late Q1 or early Q2 2025.
A termination fee of C$49 million would be payable by Softchoice
in certain circumstances, including in the context of Softchoice
entering into a definitive agreement with respect to a superior
proposal.
Birch Hill Equity Partners (“Birch Hill”) and each of the
directors and senior officers of the Company, representing
approximately 51.3% of the outstanding shares of Softchoice, have
entered into voting support agreements under which they have
agreed, among other things, to support and to vote all shares held
by them in favour of the Transaction. The voting support agreements
terminate automatically upon termination of the Arrangement
Agreement.
Following completion of the Transaction, it is expected that the
outstanding shares will be delisted from the TSX and that
Softchoice will cease to be a reporting issuer in all applicable
Canadian jurisdictions.
Unanimous Board Approval
In making its determination to unanimously recommend approval of
the Transaction to the Board, the Special Committee, and in the
Board’s determination to approve the Transaction, the Board,
considered, among other things, the following reasons for the
Transaction:
- All-cash consideration providing certainty of value and
liquidity – the all-cash consideration is not subject to any
financing condition and provides Softchoice's shareholders with
certain and immediate value and liquidity;
- Compelling value – the implied valuation multiple on the
Transaction of 13.2x, compares favourably to transactions in the
software and technology sector, as well as the current trading
value of Softchoice’s Canadian and other globally publicly listed
peers and their corresponding implied multiples based on prevailing
equity research analyst consensus estimates for both the Company
and its peers;
- Fairness Opinions – receipt by the Board of fairness opinions
from each of TD Securities Inc. (“TD Securities”) and RBC Dominion
Securities Inc. (“RBC Capital Markets”), and receipt by the Special
Committee of an independent fairness opinion from Origin Merchant
Partners (“Origin”), which each concluded that, based upon and
subject to the assumptions, limitations and qualifications set out
in their respective opinions, that the consideration to be received
by shareholders of Softchoice pursuant to the Transaction is fair,
from a financial point of view, to such shareholders;
- Arrangement Agreement Terms – the Arrangement Agreement is the
result of a comprehensive negotiation process that was undertaken
at arm’s length with the oversight and participation of the Special
Committee advised by highly qualified legal and financial advisors
and resulted in terms and conditions that are reasonable in the
judgment of the Special Committee and the Board, including
customary “fiduciary out” rights that would enable the Company to
enter into a definitive agreement with respect to an unsolicited
proposal that constitutes a superior proposal (as defined in the
Arrangement Agreement) in certain circumstances;
- Robust Review Process – following the receipt of unsolicited
inquiries from third parties, the Company was marketed widely to
potential strategic and financial counterparties in connection with
a review process conducted by the Board and the Special Committee,
which did not surface any proposal superior to the
Transaction;
- Ability to Respond to Superior Proposal – subject to compliance
with the Arrangement Agreement, the Board, in certain circumstances
until shareholder approval is obtained, is able to consider, accept
and enter into a definitive agreement with respect to an
unsolicited proposal that constitutes a superior proposal. The
voting support agreements automatically terminate upon, among other
circumstances, the Company entering into a definitive agreement
with respect to a superior proposal. The termination fee payable by
the Company of C$49 million is reasonable in the circumstances and
only payable in customary and limited circumstances; and
- Support for the Transaction – Birch Hill, the Company’s largest
shareholder, as well as each director and senior officer of the
Company have entered into voting support agreements pursuant to
which such shareholders have agreed, among other things, to support
and to vote all shares held by them in favour of the Transaction.
Collectively, such shareholders represent approximately 51.3% of
the outstanding common shares of Softchoice.
Fairness Opinions
TD Securities and RBC Capital Markets and Origin orally
delivered fairness opinions to the Board and the Special Committee,
respectively, to the effect that, as of December 30, 2024, subject
to the assumptions, limitations and qualifications communicated to
the Company, and to be contained in the TD Securities, RBC Capital
Markets and Origin written fairness opinions (the “Fairness
Opinions”), the consideration to be received by shareholders
pursuant to the Arrangement Agreement is fair, from a financial
point of view, to such shareholders.
Copies of the Fairness Opinions, as well as additional details
regarding the terms and conditions of the Transaction and the
rationale for the recommendation made by the Board of Directors
will be set out in the management proxy circular to be mailed to
shareholders in connection with the Shareholders’ Meeting and filed
by the Company on its profile on SEDAR+ at www.sedarplus.ca.
Important Additional Information and Where to Find It
In connection with the Transaction, Softchoice intends to file
relevant materials on its profile on SEDAR+. Shareholders will be
able to obtain these documents, as well as other filings containing
information about Softchoice, the Transaction and related matters,
without charge from the SEDAR+ website at www.sedarplus.ca.
Advisors
TD Securities is acting as lead financial advisor to the
Company, and RBC is acting as co-lead financial advisor to the
Company. Origin is acting as an independent financial advisor to
the Board of Directors. Stikeman Elliott LLP is acting as legal
advisor to the Company.
BDT & MSD and BofA Securities are acting as financial
advisors to WWT, while Blake, Cassels & Graydon LLP and Bryan
Cave Leighton Paisner LLP are acting as legal advisors to WWT.
About Softchoice Corporation
Softchoice Corporation (TSX:SFTC) is a Software and
Cloud-Focused IT solutions provider that equips organizations to be
agile, innovative, and secure, and people to be engaged, connected
and creative at work. We do this by delivering secure, AI-powered
cloud and digital workplace solutions supported by our advanced
software asset management methodology and capabilities. Through our
customer success framework, we create value for our customers by
reducing their IT spending, optimizing their technology, and
supporting business-driven innovation. We are a highly engaged,
high-performing team that is welcoming, inclusive, and diverse in
thought and experience, and are certified as a Great Place to Work®
in Canada and the United States. For more information, visit:
Website: www.softchoice.com
About World Wide Technology Holding Co., LLC
Founded in 1990, World Wide Technology Holding Co., LLC, a
global technology solutions provider leading the AI and Digital
Revolution, with $20 billion in annual revenue, combines the power
of strategy, execution and partnership to accelerate digital
transformational outcomes for large public and private
organizations around the world. Through its Advanced Technology
Center, a collaborative ecosystem of the world’s most advanced
hardware and software solutions, WWT helps customers and partners
conceptualize, test and validate innovative technology solutions
for the best business outcomes and then deploys them at scale
through its global warehousing, distribution and integration
capabilities.
With nearly 10,000 employees and more than 55 locations around
the world, WWT’s culture, built on a set of core values and
established leadership philosophies, has been recognized 13 years
in a row by Fortune and Great Place to Work® for its unique blend
of determination, innovation and leadership focus on diversity and
inclusion. With this culture at its foundation, WWT bridges the gap
between business and technology to make a new world happen for its
customers, partners and communities. For more information,
visit:
Website: www.wwt.com
Forward-Looking Information
This press release contains “forward-looking information” and
“forward-looking statements” (collectively, “Forward-looking
information”) within the meaning of applicable securities laws.
This forward-looking information is identified by the use of terms
and phrases such as “may”, “would”, “should”, “could”, “expect”,
“intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”,
or “continue”, the negative of these terms and similar terminology,
including references to assumptions, although not all
forward-looking information contains these terms and phrases.
Particularly, statements regarding the proposed Transaction,
including the reasons of the Board for entering into the
Arrangement Agreement, the terms and conditions of the Arrangement
Agreement, the attractiveness of the Transaction from a financial
point of view, the expected benefits of the Transaction, the
anticipated timing and the various steps to be completed in
connection with the Transaction, including (among other things) the
holding of the Shareholders’ Meeting (including the timing thereof)
as well as the satisfaction or waiver of the conditions to
completing the Transaction (such as receipt of required shareholder
approvals, court approvals and regulatory approvals), the
anticipated closing of the Transaction (including the timing
thereof), the anticipated delisting of the Company’s common shares
from the TSX and the Company ceasing to be a reporting issuer is
forward-looking information.
In addition, any statements that refer to expectations,
intentions, projections or other characterizations of future events
or circumstances contain forward-looking information. Statements
containing forward-looking information are not historical facts but
instead represent management’s expectations, estimates and
projections regarding future events or circumstances.
Forward-looking information is based on management’s beliefs and
assumptions and on information currently available to management,
and although the forward-looking information contained herein is
based upon what we believe are reasonable assumptions, investors
are cautioned against placing undue reliance on this information
since actual results may vary from the forward-looking
information.
Forward-looking information involves known and unknown risks and
uncertainties, many of which are beyond our control, that could
cause actual results to differ materially from those that are
disclosed in or implied by such forward-looking information. These
risks and uncertainties include, but are not limited to, the risk
factors described in greater detail under “Risk Factors” of the
Company’s annual information form filed on SEDAR+. These risks and
uncertainties further include (but are not limited to) as concerns
the Transaction, the failure of the parties to obtain the necessary
shareholder, regulatory and court approvals or to otherwise satisfy
the conditions to the completion of the Transaction, failure of the
parties to obtain such approvals or satisfy such conditions in a
timely manner, significant Transaction costs or unknown
liabilities, failure to realize the expected benefits of the
Transaction, and general economic conditions. Failure to obtain the
necessary shareholder, regulatory and court approvals, or the
failure of the parties to otherwise satisfy the conditions to the
completion of the Transaction or to complete the Transaction, may
result in the Transaction not being completed on the proposed
terms, or at all. In addition, if the Transaction is not completed,
and the Company continues as a publicly-traded entity, there are
risks that the announcement of the proposed Transaction and the
dedication of substantial resources of the Company to the
completion of the Transaction could have an impact on its business
and strategic relationships (including with future and prospective
employees, customers, suppliers and partners), operating results
and activities in general, and could have a material adverse effect
on its current and future operations, financial condition and
prospects. Furthermore, in certain circumstances, the Company may
be required to pay a termination fee pursuant to the terms of the
Arrangement Agreement which could have a material adverse effect on
its financial position and results of operations and its ability to
fund growth prospects and current operations.
Consequently, all of the forward-looking information contained
herein is qualified by the foregoing cautionary statements, and
there can be no guarantee that the results or developments that we
anticipate will be realized or, even if substantially realized,
that they will have the expected consequences or effects on our
business, financial condition or results of operation. Unless
otherwise noted or the context otherwise indicates, the
forward-looking information contained herein represents our
expectations as of the date hereof or as of the date it is
otherwise stated to be made, as applicable, and is subject to
change after such date. However, we disclaim any intention or
obligation or undertaking to update or amend such forward-looking
information whether as a result of new information, future events
or otherwise, except as may be required by applicable law.
_____________________________________________
1 Based on September 30, 2024 net debt outstanding and using
Bank of Canada USD to CAD exchange rate as of December 30, 2024. 2
Calculated as consideration price per share plus all dividends paid
since IPO plus C$0.13 per share dividend declared on November 7,
2024, assuming reinvestment of dividends into the Company. 3 Based
on weighted average trading price on the TSX for the 90 trading
days prior to announcement. 4 “Adjusted EBITDA” is not a recognized
measure under International Financial Reporting Standards (“IFRS”),
as issued by the International Accounting Standards Board, and does
not have a standardized meaning prescribed by IFRS. For more
information on non-IFRS measures and a reconciliation to the most
comparable IFRS measures, see the Company’s management’s discussion
and analysis of financial condition and results of operations for
the three and nine months ended September 30, 2024 and September
30, 2023.
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version on businesswire.com: https://www.businesswire.com/news/home/20241231210718/en/
Softchoice Corporation Public Relations Cheryl
Salman Director, Communications and Brand
cheryl.salman@softchoice.com
Investor Relations Tim Foran Investor Relations
investors@softchoice.com
World Wide Technology Holding Co., LLC Public
Relations Rebecca Morrison Manager, Corporate Communications
rebecca.morrison@wwt.com
Softchoice (TSX:SFTC)
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