- KLDiscovery, a leading electronic
discovery and data recovery services provider, will become a
publicly listed company as a result of the transaction
- With approximately 54% annually
recurring revenue, KLD provides cloud-based services and industry
leading technology for a client base that includes 65% of Fortune
500 companies and 95% of America’s top 100 law firms
- KLD projects approximately $310 million
in revenue and 36% growth in adjusted EBITDA to $75 million for the
fiscal year ending 12/31/19
- KLD majority shareholders The Carlyle
Group and Revolution Growth will retain and roll over their shares,
which will be subject to a lockup period alongside Pivotal
Founders
Pivotal Acquisition Corp. (NYSE: PVT) (“Pivotal”), a public
investment vehicle, and KLDiscovery (“KLD” or the “Company”), a
global provider of electronic discovery and information governance
services to Fortune 500 companies and top law firms, today
announced that they have entered into a definitive agreement in
which KLD and Pivotal will merge. As a result of the transaction,
valued at approximately $800 million in enterprise value, KLD will
become a publicly listed company.
KLD provides software and services that help protect
corporations from a range of information governance, compliance and
data issues. Its electronic discovery tools and products, including
information governance, forensic collections, secure on-line
hosting and advanced analytics—all available through its
proprietary private cloud based solution called Nebula—can be
deployed on the cloud, on premise, or behind a client’s firewall.
It is one of only a few providers that can service complex
cross-border matters in a manner compliant with data privacy
laws.
KLD’s management team, led by CEO Chris Weiler and CFO Dawn
Wilson, will continue to run KLD after the transaction. Dan
Akerson, former CEO of General Motors, will serve as Chairman of
Pivotal’s Board of Directors (the “Board”). Pivotal Chairman and
CEO Jonathan Ledecky will remain on the Board and serve as Vice
Chairman. Kevin Griffin, President and CEO of private investment
firm MGG Investment Group and a director of Pivotal, will also
remain on the Board post-transaction.
“We are excited to combine Pivotal with KLD and have admired the
success and leadership position that CEO Chris Weiler and his team
have achieved,” said Jon Ledecky, Chairman and CEO of Pivotal. “Our
principals have enjoyed strong and long-standing relationships with
both The Carlyle Group and Revolution Growth and look forward to
their partnership in this transaction as we seek to assist KLD in
its organic and acquisition growth strategies.”
“We are excited to be merging with Pivotal and gain access to
their resources and expertise, which will help us in the next
evolution of our company,” said KLD President and CEO Chris Weiler,
who brings over 30 years of experience serving clients across the
electronic discovery space. “Pivotal’s capital and public stock
currency enables us to have an optimized balance sheet and the
ability to capitalize on the consolidation of a fragmented industry
valued at $21 billion in annual revenue by IDC1. In partnership
with Pivotal, we have the opportunity to combine our organic growth
platform with our ongoing competency in completing strategic
acquisitions of scale, as well as smaller, highly accretive
‘tuck-in’ transactions.”
“Pivotal’s ability to provide KLD with a new capital structure
following the merger will enable the Company to have lower leverage
and interest expense, which will greatly increase cash flow and
financial flexibility,” said Will Darman, Managing
Director with the U.S. Growth Capital and the U.S. Equity
Opportunity funds at The Carlyle Group. “We believe that the
incremental cash flow will be instrumental in driving ongoing
growth and creating value for the Company’s shareholders.”
Founded in 2005, KLD has become one of the leading global
providers of electronic discovery and data recovery services. The
Company maintains more than 40 offices in 20 countries and has a
greater than 95% annual customer retention rate. Its award-winning
customer service is ranked second out of 100 vendors to the legal
community in aggregated surveys conducted by American Lawyer
Magazine.
Summary of Transaction
Under the terms of the proposed transaction, KLD will become a
subsidiary of Pivotal. The shareholders and management of KLD are
retaining 100% of their equity in the combined company. At closing,
the current shareholders of KLD and current shareholders of Pivotal
will hold approximately 56% and 44%, respectively, of the issued
and outstanding shares of the combined company assuming no
stockholders of Pivotal exercise their redemption rights.
At closing, the current shareholders of KLD will receive an
aggregate of 34,800,000 shares of Pivotal common stock. They will
also have the right to receive up to 2,200,000 shares of Pivotal
common stock if the reported closing sale price of Pivotal’s common
stock exceeds $13.50 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations or other similar
actions) for any 20 consecutive trading days during the five-year
period following the closing of the transaction.
The Boards of Directors of both Pivotal and KLD have unanimously
approved the proposed transaction. Completion of the transaction,
which is expected in the third quarter of 2019, is subject to
approval by Pivotal stockholders and other customary closing
conditions. Additionally, at closing, Pivotal is required to have
at least $175,000,000 available to it from any financing source,
including from its trust account created in connection with its
initial public offering and up to $50 million that may come from
the forward purchase contract entered into by Pivotal in connection
with its IPO, after payment to holders of Pivotal Class A common
stock that seek redemption in connection with the transactions and
net of certain other expenses.
For additional information on the transaction, see Pivotal’s
website at www.pivotalac.com and Pivotal’s Current Report on Form
8-K, which will be filed promptly and which can be obtained on the
Securities and Exchange Commission's website
(http://www.sec.gov).
Cantor Fitzgerald and BTIG, LLC acted as capital markets and
financial advisors to Pivotal. Graubard Miller acted as legal
advisor to Pivotal and Latham & Watkins LLP acted as legal
advisor to KLD.
Additional Information and Where to Find It
Pivotal intends to file a proxy statement, prospectus and other
relevant documents with the Securities and Exchange Commission
(“SEC”) to be used at its meeting of stockholders to approve the
proposed transaction with KLD. The proxy statement will be mailed
to stockholders as of a record date to be established for voting on
the proposed business combination. INVESTORS AND SECURITY HOLDERS
OF PIVOTAL ARE URGED TO READ THE PROXY STATEMENT, PROSPECTUS AND
OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY
AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors and security holders will be able to obtain free copies
of the proxy statement, prospectus and other documents containing
important information about Pivotal and KLD once such documents are
filed with the SEC, through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with the SEC by
Pivotal when and if available, can be obtained free of charge on
Pivotal’s website at www.pivotalac.com or by directing a written
request to Pivotal Acquisition Corp., c/o Graubard Miller, The
Chrysler Building, 405 Lexington Avenue, 11th Floor, New York, New
York 10174.
Participants in the Solicitation
Pivotal and KLD and their respective directors and executive
officers, under SEC rules, may be deemed to be participants in the
solicitation of proxies of Pivotal’s stockholders in connection
with the proposed transaction. Investors and security holders may
obtain more detailed information regarding the names and interests
in the proposed transaction of Pivotal’s directors and officers in
Pivotal’s filings with the SEC, including Pivotal’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2018, which was
filed with the SEC on April 1, 2019. Information regarding the
persons who may, under SEC rules, be deemed participants in the
solicitation of proxies to Pivotal’s stockholders in connection
with the proposed business combination will be set forth in the
Registration Statement for the proposed business combination when
available. Additional information regarding the interests of
participants in the solicitation of proxies in connection with the
proposed business combination will be included in the Registration
Statement that Pivotal intends to file with the SEC.
No Offer or Solicitation
This communication shall neither constitute an offer to sell or
the solicitation of an offer to buy any securities, nor shall there
be any sale of securities in any jurisdiction in which the offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such
jurisdiction.
Conference Call Scheduled
Pivotal will host a conference call to discuss the proposed
business combination with the investment community on Tuesday, May
21, 2019, at 11:00 AM EDT. Investors may listen to the conference
call by dialing (844) 730-1968 toll-free in the U.S. or (614)
335-7546 internationally. Please use the conference identification
5359788. The presentation slides will be available at
www.pivotalac.com. A replay will also be available two hours after
the call. To access a replay of the conference call, investors can
dial (800) 585-8367 toll-free in the U.S. or (404) 537-3406
internationally and provide the replay code 5359788.
About KLD
KLDiscovery provides technology-enabled services and software to
help law firms, corporations, government agencies and consumers
solve complex data challenges. The company, with more than 40
offices across 20 countries, is a global leader in delivering
best-in-class eDiscovery, information governance and data recovery
solutions to support the litigation, regulatory compliance,
internal investigation and data recovery and management needs of
its clients. KLDiscovery offers data collection and forensic
investigation, early case assessment, electronic discovery and data
processing, application software and data hosting for web-based
document reviews, and managed document review services. In
addition, through its global Ontrack Data Recovery business,
KLDiscovery delivers world-class data recovery, email extraction
and restoration, data destruction and tape management. KLDiscovery
has been recognized as one of the fastest growing companies in
North America by both Inc. Magazine (Inc. 5000) and Deloitte
(Deloitte’s Technology Fast 500) and CEO Chris Weiler was
recognized as a 2014 Ernst & Young Entrepreneur of the Year™.
Additionally, KLDiscovery is an Orange-level Relativity Best in
Service Partner, a Relativity Premium Hosting Partner and maintains
ISO/IEC 27001 Certified data centers. For more information, please
email info@kldiscovery.com or visit www.kldiscovery.com.
About Pivotal Acquisition
Corp.
Pivotal Acquisition Corp. is a blank check company organized for
the purpose of effecting a merger, share exchange, asset
acquisition, stock purchase, recapitalization, reorganization, or
other similar business combination with one or more businesses or
entities. Pivotal’s securities are quoted on the New York Stock
Exchange under the ticker symbols PVT, PVT WS and PVT.U. For more
information, visit www.pivotalac.com.
Forward Looking
Statements
This press release includes “forward looking statements” within
the meaning of the “safe harbor” provisions of the United States
Private Securities Litigation Reform Act of 1995. When used in this
press release, the words “estimates,” “projected,” “expects,”
“anticipates,” “forecasts,” “plans,” “intends,” “believes,”
“seeks,” “may,” “will,” “should,” “future,” “propose” and
variations of these words or similar expressions (or the negative
versions of such words or expressions) are intended to identify
forward-looking statements. These forward-looking statements are
not guarantees of future performance, conditions or results, and
involve a number of known and unknown risks, uncertainties,
assumptions and other important factors, many of which are outside
Pivotal’s or KLD’s management’s control, that could cause actual
results or outcomes to differ materially from those discussed in
the forward-looking statements. Important factors, among others,
that may affect actual results or outcomes include: the inability
to complete the transactions contemplated by the proposed business
combination; the inability to recognize the anticipated benefits of
the proposed business combination, which may be affected by, among
other things, the amount of cash available following any
redemptions by Pivotal stockholders; the ability to meet the NYSE’s
listing standards following the consummation of the transactions
contemplated by the proposed business combination; costs related to
the proposed business combination; KLD’s ability to execute on its
plans to develop and market new products and the timing of these
development programs; KLD’s estimates of the size of the markets
for its solutions; the rate and degree of market acceptance of
KLD’s solutions; the success of other competing technologies that
may become available; KLD’s ability to identify and integrate
acquisitions; the performance and security of KLD’s services;
potential litigation involving Pivotal or KLD; and general economic
and market conditions impacting demand for KLD’s services. Other
factors include the possibility that the proposed transaction does
not close, including due to the failure to receive required
security holder approvals, or the failure of other closing
conditions. Neither Pivotal nor KLD undertake any obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law.
1 Radicati Group Report (March 2018)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190520005779/en/
Jonathan Gasthalter/Nathaniel GarnickGasthalter & Co.(212)
257-4170
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