- Q4 Inc. shareholders to receive cash payment of $6.05 per
Common Share
- Purchase price represents a 36% premium to the closing price of
the Common Shares on November 10, 2023, a 43% premium to the 20 day
volume-weighted average trading price of the Common Shares and a
premium of 46% to the 60-day volume-weighted average trading price
of the Common Shares
- Board of Directors (excluding any conflicted directors)
unanimously recommends that shareholders vote in favour of the
Arrangement
- Certain shareholders, including Chief Executive Officer,
Darrell Heaps, to roll their equity ownership
- Shareholders holding 37.2% of the Common Shares have agreed to
support the Arrangement
- Q4 Inc. will continue to execute on its mission to connect the
capital markets and deliver exceptional value to its clients and
partners
Q4 Inc. (TSX:QFOR) (“Q4” or the “Company”), the leading capital
markets access platform, today announced that it has entered into a
definitive arrangement agreement (the “Arrangement Agreement”) with
an entity (the “Purchaser”) controlled by Sumeru Equity Partners
(“Sumeru”), a leading technology-focused investment firm that
provides growth capital, operating expertise, and scaling
partnership to enterprise technology companies in North America and
Europe. Pursuant to the Arrangement Agreement, the Purchaser will
acquire all of the outstanding common shares of the Company
(“Common Shares”) for $6.05 per Common Share, other than those held
by certain shareholders rolling their equity interests, by way of
an arrangement transaction (the “Arrangement”). Pursuant to the
Arrangement Agreement, funds associated with Ten Coves Capital
(“Ten Coves”), Darrell Heaps, the Founder, President and Chief
Executive Officer of the Company, Neil Murdoch, a director of the
Company, and another individual shareholder (collectively, the
“Rolling Shareholders”) will exchange an aggregate of 13,715,467
Common Shares for equity interests in the Purchaser having an
equity value equivalent to the cash purchase price payable under
the Arrangement. Completion of the Arrangement is subject to
obtaining shareholder and other customary approvals. The
Arrangement represents an aggregate total equity value of
approximately $257 million on a fully-diluted, in-the-money basis,
inclusive of the Common Shares to be sold by the Rolling
Shareholders (the “Rollover Shares”). Upon completion of the
Arrangement, Q4 will become a privately held company.
The cash purchase price represents a premium of approximately
36% to the closing price of the Common Shares on the Toronto Stock
Exchange (the “TSX”) on November 10, 2023, the last trading day
prior to the announcement of the Arrangement, a premium of
approximately 43% to the 20 day volume-weighted average trading
price of the Common Shares as at that date, and a premium of
approximately 46% to the 60-day volume-weighted average trading
price of the Common Shares on the TSX.
Julie Silcock, Independent Director of the Q4 Inc. Board said,
"We are pleased to have reached this agreement with Sumeru Equity
Partners, which delivers significant, immediate value to
shareholders. The Board is unanimous in its belief that today’s
transaction appropriately reflects the Company’s innovative and
strong business while maximizing shareholder value, and I am
immensely proud to have worked alongside Q4’s outstanding
management team and my fellow Directors to transform Q4 at this
time."
"I am very pleased about this significant milestone in our
journey,” said Darrell Heaps, Founder and CEO of Q4 Inc. “Sumeru’s
belief in our vision and their exceptional track record in
supporting founders and management teams speaks volumes. I am
excited to collaborate with them and drive category-defining
growth, building the next great capital markets platform company.
Q4 has become a central force in how thousands of public companies
communicate and engage with the market. The Q4 Platform, fueled by
innovative technology, data, and insights, empowers our customers
to communicate their investment story to the world. It enables them
to identify and target investors strategically, helping them build
a strong shareholder base. The Sumeru team possesses a deep
understanding of our business and their support will enable us to
further build on our exceptional culture, while investing in our
strategic initiatives, and expanding our platform to help our
customers win in the capital markets."
“We have long admired Q4’s innovation leadership in the investor
relations market—offering unified capital markets access software
for IR organizations of all sizes,” said Sumeru’s Mark Haller,
Managing Director, and Jack McCabe, Principal. “Q4 is
well-positioned for growth given its single, integrated platform
across IR websites, virtual events, investor targeting and
real-time analytics. We are excited to partner with Darrell Heaps
and the Q4 team to accelerate the Company’s growth, expand its
product capabilities and broaden customer relationships.”
Transaction Details
The Arrangement resulted from a review process undertaken by the
Company following inbound interest from Sumeru and several others
since the Company completed its initial public offering in 2021.
The process and negotiation of the Arrangement with Sumeru were
supervised by a committee of independent directors (the “Special
Committee”). The Company entered into the Arrangement Agreement
based on the unanimous approval of the Company’s board of directors
(the “Board”), with conflicted directors abstaining, and the
unanimous recommendation of the Special Committee that the
Arrangement is in the best interests of the Company and fair to the
holders of the Common Shares (the “Shareholders”) (other than the
Rolling Shareholders). The Arrangement Agreement was the result of
a comprehensive negotiation process that was conducted at arm’s
length with the supervision and involvement of the Special
Committee, as advised by independent and highly qualified legal and
financial advisors.
The Rolling Shareholders are rolling an aggregate of 13,715,467
Rollover Shares (the “Rollover”) at an implied value per Common
Share equal to $6.05 per Common Share. The Rollover Shares
represent approximately 34.1% of the issued and outstanding Common
Shares.
Transaction Approval
The Board, with Mr. Heaps, Mr. Murdoch and nominees of Ten
Coves, being Messrs. Ned May and Dan Kittredge, declaring their
conflicts of interest and abstaining from voting, unanimously
approved the Arrangement Agreement following receipt of the
unanimous recommendation of the Special Committee. The Special
Committee was appointed by the Board to, among other matters,
review the potential transaction and potential alternatives and
consider the Company’s best interests and the implications to
Shareholders and other stakeholders. The Board unanimously, with
the conflicted directors abstaining from voting, recommends that
Shareholders vote in favour of the Arrangement. The Company intends
to call and hold a special meeting of Shareholders in the first
quarter of 2024 (the “Special Meeting”), where the Arrangement will
be considered and voted upon by Shareholders of record. Further
information regarding the Special Meeting, including the record and
meeting date will be made available in December.
In making its determination to unanimously recommend approval of
the Arrangement to the Board, the Special Committee, and in the
Board’s determination to approve the Arrangement, the Board,
considered, as applicable, the following reasons for the
Arrangement:
- Compelling Value and Immediate Liquidity – the all-cash
consideration provides Shareholders with certainty of value and
immediate value, and is of particular benefit given the limited
trading volume and lack of liquidity in the Common Shares. The
consideration to be received by Shareholders pursuant to the
Arrangement represents a 36% premium to the closing price of the
Common Shares on the TSX on November 10, 2023, a 43% premium to the
20-day volume-weighted average trading price of the Common Shares
on the TSX as of November 10, 2023 and a 46% premium to the 60-day
volume-weighted average trading price of the Common Shares on the
TSX as of November 10, 2023.
- Formal Valuation – the formal valuation prepared by Stifel
Nicolaus Canada Inc. (“Stifel Canada”), independent valuator to the
Special Committee, which concluded that, based upon and subject to
the assumptions made, procedures followed, matters considered,
limitations and qualifications set forth therein, as of November
12, 2023, the fair market value of the Common Shares was in the
range of $5.50 to $6.80 per Common Share on a fully diluted basis,
with the cash purchase price payable by the Purchaser falling
within this range;
- Fairness Opinions – the receipt of the fairness opinions from
Stifel Canada, independent valuator, and Raymond James &
Associates Inc. (“Raymond James”), exclusive financial advisor to
the Special Committee, each of which concluded that, based upon and
subject to the assumptions made, procedures followed, matters
considered, limitations and qualifications set out in their
respective opinions, that the consideration to be received by the
Shareholders (other than the Rolling Shareholders) pursuant to the
Arrangement is fair, from a financial point of view, to such
Shareholders;
- Go-Shop Provision – the Arrangement Agreement includes a
go-shop provision during which the Company, with the assistance of
its financial advisors, will be permitted to actively solicit,
evaluate and enter into negotiations with respect to potential
superior acquisition proposals during an initial 35-day period,
with the possibility of a further 5-day extension under certain
circumstances;
- Support for the Arrangement – each of the Rolling Shareholders
and each of the directors and executive officers of the Company has
entered into a voting support agreement, pursuant to which they
have agreed to, among other things, vote their Common Shares, which
represent approximately 37.2% of all of the Common Shares, in
favour of the Arrangement at the Special Meeting.
- Arrangement Agreement Terms – the Arrangement Agreement is the
result of a comprehensive process that was conducted at arm’s
length with the involvement and supervision of the Special
Committee as advised by independent and 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 a customary “fiduciary out” that will enable the Company
to enter into a Superior Proposal (as defined in the Arrangement
Agreement) in certain circumstances.
- Ability to Respond to Superior Proposal – Under the Arrangement
Agreement, the Board, in certain circumstances both during the
go-shop period and thereafter until Shareholder approval is
obtained, is able to consider, accept and enter into a definitive
agreement with respect to a superior proposal, and withdraw, modify
or amend its recommendation that Shareholders vote to approve the
Arrangement Agreement. The voting and support agreements provide
the ability to support a superior proposal.
- Break Fee and Reverse Break Fee – the break fee payable by the
Company of $9.00 million, or $4.88 million if terminated during the
go-shop period, is reasonable in the circumstances and only payable
in customary and limited circumstances, and the Company is entitled
to a reverse break fee of $12.25 million in certain circumstances
if the Arrangement Agreement is terminated; and
- Minority Vote and Court Approval – the Arrangement must be
approved by not only two-thirds of the votes cast by Shareholders,
but also by a majority of the minority in accordance with
Multilateral Instrument 61-101 - Protection of Minority Security
Holders in Special Transactions (“MI 61-101”), and by the Ontario
Superior Court of Justice (Commercial List), which will consider
the fairness and reasonableness of the Arrangement to all
Shareholders.
Valuation and Fairness Opinions
In connection with their review and consideration of the
Arrangement, the Special Committee engaged Raymond James as its
exclusive financial advisor based on their expertise and
familiarity with the Company to assist the Committee in, among
other things, conducting a limited outreach to potential interested
parties. The Committee subsequently retained Stifel Canada as its
independent valuator for the Arrangement. Stifel Canada has
verbally delivered to the Special Committee the results of its
formal valuation prepared in accordance with MI 61-101, which
concluded that, based upon and subject to the assumptions made,
procedures followed, matters considered, limitations and
qualifications set forth therein, as of November 12, 2023, the fair
market value of the Common Shares was in the range of $5.50 to
$6.80 per Common Share on a fully diluted basis. In addition, each
of Raymond James and Stifel Canada each provided an opinion to the
Special Committee that, based upon and subject to the assumptions,
limitations and qualifications set out in their respective
opinions, the consideration to be received by the Shareholders
(other than the Rolling Shareholders) pursuant to the Arrangement
is fair, from a financial point of view, to such Shareholders.
Written copies of the formal valuation and fairness opinions will
be included in the materials sent to Shareholders in connection
with the Special Meeting.
Additional Transaction Details
Pursuant to the terms of the Arrangement Agreement, the
Purchaser will acquire all of the Common Shares for a cash payment
of $6.05 per Common Share, other than the Rollover Shares, which
will be acquired in exchange for equity interests in the Purchaser
at a valuation of $6.05 per Rollover Share.
The Arrangement is to be completed by way of a plan of
arrangement under the Business Corporations Act (Ontario) and will
constitute a “business combination” for purposes of MI 61-101. The
Arrangement is subject to certain approvals at the Special Meeting,
including by (i) at least two-thirds of the votes cast by
Shareholders, voting as a single class; and (ii) a simple majority
of the votes cast by Shareholders (excluding Rollover Shares and
any other Common Shares required to be excluded pursuant to MI
61-101). Completion of the Arrangement is subject to other
customary conditions, including receipt of Court approvals. The
Arrangement is not subject to a financing condition. Assuming the
timely receipt of all required approvals, the Arrangement is
expected to close in the first quarter of 2024.
The Arrangement Agreement provides for a 35 day go-shop period
that allows the Company, with the assistance of its financial
advisor, to actively solicit, evaluate and enter into negotiations
with third parties that express an interest in acquiring the
Company. The go-shop period expires on December 18, 2023 subject to
the availability of an extension of up to five days in certain
circumstances. There can be no assurance that this process will
result in a superior proposal. The Company does not intend to
disclose developments with respect to the go-shop process unless
and until the Board makes a determination requiring further
disclosure.
The Arrangement Agreement includes customary non-solicitation
provisions, which are subject to customary "fiduciary out"
provisions that entitle the Company to terminate the Arrangement
Agreement and accept a Superior Proposal, subject to a customary
right to match in favour of the Purchaser.
The foregoing summary is qualified in its entirety by the
provisions of the Arrangement Agreement, a copy of which, together
with the voting support agreements, will be filed on SEDAR+ at
www.sedarplus.ca.
Upon closing of the Arrangement, the Purchaser intends to cause
the Common Shares to cease to be listed on the TSX and to cause the
Company to submit an application to cease to be a reporting issuer
under applicable Canadian securities laws.
Voting Agreements
Each of the Rolling Shareholders and the directors and executive
officers of the Company has agreed to vote their Common Shares in
favor of the Arrangement pursuant to voting support agreements,
subject to customary exceptions. The Common Shares represented by
the parties to the voting support agreements represent
approximately 37.2% of the votes of all of the Common Shares.
Further information regarding the Arrangement, the Arrangement
Agreement and the Special Meeting, including a copy of Stifel’s
formal valuation and fairness opinion and Raymond James’ fairness
opinion, will be included in the management information circular
expected to be mailed to Shareholders of record in connection with
the Special Meeting. Copies of the proxy materials in respect of
the Special Meeting will be available on SEDAR+ at
www.sedarplus.ca.
Early Warning Disclosure by the Rolling Shareholders
As of the date hereof, Ten Coves owns 10,276,836 Common Shares,
all of which will be exchanged for an indirect equity interest in
the Purchaser. Further to the requirements of National Instrument
62-104 - Take-Over Bids and Issuer Bids and National Instrument
62-103 - The Early Warning System and Related Take-Over Bid and
Insider Reporting Issues, Ten Coves will file an early warning
report in accordance with applicable securities laws.
A copy of the Ten Coves early warning report will be filed with
the applicable securities commissions and will be made available on
SEDAR+ at www.sedarplus.ca. Further information and a copy of the
early warning reports may be obtained by contacting Tanu Suneja,
Chief Financial Officer and Chief Compliance Officer of Ten Coves
Capital, 1019 Post Road, Darien, CT, 06820, USA, telephone:
203-434-2034.
Advisors
Raymond James is acting as exclusive financial advisor to the
Special Committee. Stifel Canada is acting as independent valuator
to the Special Committee. Osler, Hoskin & Harcourt LLP is
acting as legal advisor to the Company. Dorsey & Whitney LLP is
acting as special U.S. legal advisor to the Company. McCarthy
Tétrault LLP is acting as legal advisor to the Special Committee.
Blake, Cassels & Graydon LLP is acting as legal advisor to the
Rolling Shareholders. National Bank Financial Inc. is acting as
exclusive financial advisor to Sumeru. Gibson, Dunn & Crutcher
LLP and Stikeman Elliott LLP are acting as legal advisors to
Sumeru.
About Q4 Inc.
Q4 Inc. (TSX: QFOR) is the leading capital markets access
platform that is transforming how issuers, investors, and the
sell-side efficiently connect, communicate, and engage with each
other.
The Q4 Platform facilitates interactions across the capital
markets through IR website products, virtual events solutions,
engagement analytics, investor relations CRM, shareholder and
market analysis, surveillance, and ESG tools. The Q4 Platform is
the only holistic capital markets access platform that digitally
drives connections, analyzes impact, and targets the right
engagement to help public companies work faster and smarter.
The company is a trusted partner to more than 2,600 public
companies globally, including many of the most respected brands in
the world, and maintains an award-winning culture where team
members grow and thrive.
Q4 is headquartered in Toronto, with offices in New York and
London. Learn more at investors.Q4inc.com.
All dollar figures in this release are in Canadian dollars
unless otherwise indicated.
About Sumeru Equity Partners
Sumeru Equity Partners (“Sumeru”) provides growth capital at the
intersection of people and innovative technology. Sumeru seeks to
embolden innovative founders and management teams with capital and
scaling partnership. Sumeru has invested over US$3 billion in more
than fifty platform and add-on investments across enterprise and
vertical SaaS, data analytics, education technology, infrastructure
software and cybersecurity. The firm typically invests in companies
throughout North America and Europe. For more information, please
visit sumeruequity.com.
Cautionary Note Regarding Forward-Looking Information
This release includes “forward-looking information” and
“forward-looking statements” (collectively, “forward-looking
statements”) within the meaning of applicable securities laws.
Forward-looking statements include, but are not limited to,
statements with respect to the rationale of the Board for entering
into the Arrangement Agreement, the terms and conditions of the
Arrangement Agreement, the premium to be received by Shareholders,
the attractiveness of the Arrangement from a financial point of
view, the complementarity and compatibility of Q4’s business with
Sumeru’s existing business, the completion of the Rollover, the
expected benefits of the Arrangement, the anticipated timing and
the various steps to be completed in connection with the
Arrangement, including receipt of Shareholder and court approvals,
the anticipated timing for closing of the Arrangement, the
anticipated delisting of the Common Shares from the TSX and the
Company ceasing to be a reporting issuer under Canadian securities
laws.
In some cases, but not necessarily in all cases, forward-looking
statements can be identified by the use of forward-looking
terminology such as “plans,” “targets,” “expects” or “does not
expect,” “is expected,” “an opportunity exists,” “is positioned,”
“estimates,” “intends,” “assumes,” “anticipates” or “does not
anticipate” or “believes,” or variations of such words and phrases
or state that certain actions, events or results “may,” “could,”
“would,” “might,” “will” or “will be taken,” “occur” or “be
achieved.” In addition, any statements that refer to expectations,
projections or other characterizations of future events or
circumstances contain forward-looking statements. Forward-looking
statements are not historical facts, nor guarantees or assurances
of future performance but instead represent management’s current
beliefs, expectations, estimates and projections regarding future
events and operating performance. Forward-looking statements are
necessarily based on a number of opinions, assumptions and
estimates that, while considered reasonable by the Company as of
the date of this release, are subject to inherent uncertainties,
risks and changes in circumstances that may differ materially from
those contemplated by the forward-looking statements. Important
factors that could cause actual results to differ, possibly
materially, from those indicated by the forward-looking statements
include, but are not limited to, the possibility that the proposed
Arrangement will not be completed on the terms and conditions, or
on the timing, currently contemplated, or at all, the possibility
of the Arrangement Agreement being terminated in certain
circumstances, the process and potential results of the go-shop
period, the ability of the Board to consider and approve a Superior
Proposal for the Company, and the other risk factors identified
under “Risk Factors” in the Company’s latest annual information
form and management’s discussion and analysis for the year ended
December 31, 2022 and in the management’s discussion and analysis
for the period ended September 30, 2023, and in other periodic
filings that the Company has made and may make in the future with
the securities commissions or similar regulatory authorities in
Canada, all of which are available under the Company’s SEDAR+
profile at www.sedarplus.ca. These factors are not intended to
represent a complete list of the factors that could affect the
Company. However, such risk factors should be considered carefully.
There can be no assurance that such estimates and assumptions will
prove to be correct. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
release.
Although the Company has attempted to identify important risk
factors that could cause actual results to differ materially from
those contained in forward-looking statements, there may be other
risk factors not currently known to us or that we currently believe
are not material that could also cause actual results or future
events to differ materially from those expressed in such
forward-looking statements. There can be no assurance that such
information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
information. Accordingly, you should not place undue reliance on
forward-looking statements. The forward-looking statements
represent the Company’s expectations as of the date of this release
(or as the date it is otherwise stated to be made) and are subject
to change after such date. However, the Company disclaims any
intention and undertakes no obligation to update or revise any
forward-looking statements whether as a result of new information,
future events or otherwise, except as required under applicable
Canadian securities laws. All of the forward-looking statements
contained in this release are expressly qualified by the foregoing
cautionary statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231113938891/en/
Investors: Edward Miller Director, Investor Relations
(437) 291-1554 ir@q4inc.com
Media: Heather Noll Manager, Corporate Communications
media@q4inc.com
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