The parent company of Cision, a leading global provider of cloud-based earned media solutions, and Capitol Acquisition Corp. III (NASDAQ: CLAC; “Capitol”), a public investment vehicle, announced that they have entered into a definitive agreement in which Cision will become a publicly listed company with an anticipated initial enterprise value of approximately $2.4 billion.
Cision delivers a sophisticated, easy-to-use platform for communicators to reach relevant media influencers and craft compelling campaigns that impact customer behavior. With rich monitoring and analytics, the Cision Communications Cloud™ arms brands with the insights they need to link their earned media to strategic business objectives, while aligning it with owned and paid channels. This platform enables companies and brands to build consistent, meaningful and enduring relationships with influencers and buyers in order to amplify their marketplace influence.
Cision’s management team, led by CEO Kevin Akeroyd and CFO Jack Pearlstein, will continue to run the combined company post-transaction. Capitol Chairman and CEO, Mark Ein, will join the combined company’s board of directors and serve as Vice Chairman. Capitol’s President and CFO, Dyson Dryden, will also join the board.
“There is a shift in corporate marketing spend to the earned channel driven by its higher ROI and proven success in building brands and the declining efficacy of traditional paid media advertising,” said Mark Ein, Chairman and CEO of Capitol. “We are investing in Cision, a market leader, to get behind this large, important trend and position the company for accelerated future growth. We think the combined company will deliver superior returns for investors long into the future.”
The rise of marketing technology is driving increased investment in communications and PR. According to Gartner Inc., marketing technology spend is expected to exceed spend on core enterprise IT by 2017 and is growing at a much faster rate (12% vs. 3%, respectively). With the effectiveness of paid advertising declining, as evidenced by GlobalWebIndex research indicating that 60% of desktop users have used ad-blockers, marketing technology spend is shifting toward earned media channels. These tailwinds, coupled with strategic flexibility provided by the merger, will broaden Cision’s market opportunity beyond leadership in global communications intelligence software and services, a $3 billion industry according to Burton-Taylor International Consulting LLC, into the marketing software market, which IDC estimates will reach $32 billion by 2018, and ultimately into the broader digital marketing and data markets.
“This transaction reflects the significant progress Cision has made in its effort to build the most comprehensive media intelligence platform in the world,” said GTCR Managing Director Mark Anderson. “We look forward to Cision continuing to expand and accelerate its global leadership position as a public company with access to new sources of capital.”
“We appreciate GTCR’s ongoing sponsorship, which has been instrumental in building the business, and with this transaction are thrilled to also partner with Capitol as we execute our vision for the company,” said CEO Kevin Akeroyd. “This transaction marks a key milestone for Cision. We are extremely well positioned to accelerate our growth following our acquisition of PR Newswire and the recent launch of the Cision Communications Cloud™ which enhanced our scale, comprehensive SaaS product set and global reach.”
“We are excited to partner with the Cision team as they execute on their platform growth strategy,” said Dyson Dryden, President and CFO of Capitol. “We believe Kevin’s prior experience at Oracle, where he built the Marketing Cloud business unit from a nascent stage into one of the largest Marketing and Ad Tech providers in the industry and Jack’s long successful track record, including serving as CFO of four previous GTCR companies, uniquely qualifies them to execute the company’s long-term growth plan.”
Summary of Transaction
Under the terms of the proposed transaction, the combination will be effected through a “contribution and exchange” pursuant to which Cision will be contributed to a wholly owned subsidiary of Capitol that will become a publicly traded entity following a subsequent merger of a subsidiary of Holdings into Capitol. The combined company will have an anticipated initial enterprise value of approximately $2.4 billion implying a 10.5x multiple of projected 2017 Adjusted EBITDA and a multiple of 9.2x projected 2018 Adjusted EBITDA.
GTCR and current management are retaining 100% of their equity in the company. At closing, current Cision shareholders and current stockholders of Capitol will hold approximately 68% and 32%, respectively, of the issued and outstanding shares of the new publicly traded company’s common stock, with GTCR remaining a majority owner. A portion of the consideration to Cision’s shareholders will be in the form of incentive earnout shares totaling up to 6 million common shares, issued in 2 million increments when the combined company’s stock price reaches $13.00, $16.00 and $19.00 per share.
The net cash proceeds from this transaction are expected to be used to pay down Cision’s existing second lien debt.
The boards of directors of both Capitol and Cision have unanimously approved the proposed transaction. Completion of the transaction, which is expected in the second quarter of 2017, is subject to approval by Capitol stockholders and other customary closing conditions.
For additional information on the transaction, see Capitol’s Current Report on Form 8-K, which will be filed promptly and which can be obtained, without charge, at the Securities and Exchange Commission’s internet site (http://www.sec.gov).
Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Credit Suisse served as financial and capital markets advisors to Capitol. PJT Partners served as financial advisor to Cision. Latham & Watkins LLP and Graubard Miller acted as legal advisors to Capitol and Kirkland & Ellis LLP acted as legal advisor to Cision.
About Cision
Cision is a leading media communication technology and analytics company that enables marketers and communicators to effectively manage their earned media programs in coordination with paid and owned channels to drive business impact. As the creator of the Cision Communications Cloud™, the first-of-its-kind earned media cloud-based platform, Cision has combined cutting-edge data, analytics, technology and services into a unified communication ecosystem that brands can use to build consistent, meaningful and enduring relationships with influencers and buyers in order to amplify their marketplace influence. Cision solutions also include market-leading media technologies such as PR Newswire, Gorkana, PRWeb, Help a Reporter Out (HARO) and iContact. Cision serves over 75,000 customers in 170 countries and 40 languages worldwide, and maintains offices in North America, Europe, the Middle East, Asia, and Latin America. For more information, visit www.cision.com or follow @Cision on Twitter.
About Capitol Acquisition Corp. III
Capitol Acquisition Corp. III is a public investment vehicle formed for the purpose of effecting a merger, acquisition or similar business combination. Capitol is led by Chairman and Chief Executive Officer Mark D. Ein, and President and Chief Financial Officer L. Dyson Dryden. Capitol’s securities are quoted on the Nasdaq stock exchange under the ticker symbols CLAC, CLACW and CLACU. The company, which raised $325 million of cash proceeds in an initial public offering in October 2015, is Capitol’s third publicly traded investment vehicle. The first, Capitol Acquisition Corp., created Two Harbors Investment Corp. (NYSE: “TWO”), a leading mortgage real estate investment trust (REIT) and the second, Capitol Acquisition Corp. II, merged with Lindblad Expeditions, Inc. (NASDAQ: “LIND”), a global leader in expedition travel.
