Clarivate to Combine with CPA Global, Creating a World Leader in Intellectual Property Information and Services
- Combination forms a true end-to-end global solution covering the entire innovation and intellectual property lifecycle
- Accretive to Clarivate adjusted diluted earnings in 2021 with opportunities for significant revenue and cost synergies
- Clarivate reaffirms standalone 2020 financial outlook
- Clarivate to host conference call today at 8:00 AM ET to discuss transaction
LONDON, July 29, 2020 /PRNewswire/ -- Clarivate Plc (NYSE:CCC), a global leader in providing trusted information and insights to accelerate the pace of innovation, today announced that it has signed a definitive agreement to combine with CPA Global, a global leader in intellectual property ("IP") software and tech-enabled services. In the all-stock transaction, CPA Global shareholders will receive approximately 218 million Clarivate ordinary shares, representing 35% pro forma fully diluted ownership of Clarivate. Based on the 30-day volume weighted average share price of Clarivate, the implied enterprise value is approximately $6.8 billion, which includes approximately $900 million of the present value of tax assets. The transaction, which is subject to customary closing conditions, including regulatory approvals, is expected to close fourth quarter of 2020.
CPA Global provides IP management and technology solutions to more than 12,000 law firm and corporate customers, providing IP professionals with the information, insights and technology they need to manage the world's intellectual property. Together, CPA Global and Clarivate will form a true end-to-end solution that covers the entire innovation and IP lifecycle - from scientific and academic research to IP portfolio management and protection. The proposed combination of market-leading intellectual property software, data, technology and services will provide customers with seamless access to richer content and broader capabilities as they execute on their innovation and IP strategies.
Jerre Stead, Executive Chairman and CEO, Clarivate, said: "This is a transformative combination with a strong strategic fit between the two companies. It will create a full-service IP organization which will provide customers with a wide range of products and services to help them make faster and smarter critical decisions. The many strategic and financial benefits are expected to enhance our growth and drive value for shareholders. The two companies share similar core values, along with deep industry, subject matter and technical expertise, that when combined, will strengthen our ability to accelerate the pace of innovation."
Simon Webster, CEO, CPA Global, said: "Combining CPA Global and Clarivate is a natural next step for both businesses. The fit between our respective product offerings across the innovation and IP lifecycle, the commonality of our vision for the future of the industry, and the alignment of both companies' cultures and values makes for an extremely exciting future for our customers, employees and shareholders alike."
Compelling strategic benefits to drive future growth
Financially compelling transaction
In connection with the transaction, Clarivate intends to refinance CPA Global's debt and has secured a $1.5 billion fully committed incremental term loan facility led by Citi and Bank of America. Clarivate expects to obtain long-term financing with a new debt issuance before the closing of the transaction.
CPA Global's majority owner, Leonard Green & Partners ("LGP"), will have the right to appoint two directors to the Clarivate board, which is expected to increase the Clarivate board from 11 to 13 members. Certain CPA Global shareholders, including funds advised by majority owner LGP along with funds advised by Castik Capital and Partners Group, will be locked-up from selling their Clarivate shares until October 1, 2021.
Clarivate reaffirming standalone 2020 outlook
For the year ending December 31, 2020, excluding the combination with CPA Global, Clarivate continues to expect:
Clarivate will issue its second quarter 2020 financial results on July 30, 2020.
Evercore is serving as lead financial advisor and Davis Polk & Wardwell LLP is serving as legal advisor to Clarivate. Goldman Sachs is serving as lead financial advisor and Latham & Watkins LLP is serving as legal advisor to CPA Global.
Conference call and webcast
Clarivate will host a conference call and webcast to discuss the strategic and operating aspects of the CPA Global combination on Wednesday, July 29th at 8:00 a.m. Eastern Time. The conference call will be simultaneously webcast on the Investor Relations section of the company's website.
Interested parties may access the live audio broadcast by dialing 1-888-317-6003 in the United States, 1-412-317-6061 for international, and 1-866-284-3684 in Canada. The conference ID number is 8098149. An audio replay will be available approximately two hours after the completion of the call at 1-877-344-7529 in the United States, 1-412-317-0088 for international, and 1-855-669-9658 in Canada. The Replay Conference ID number is 10146921. The recording will be available for replay through August 12, 2020.
The webcast can be accessed at https://services.choruscall.com/links/ccc200729.html and will be available for replay.
About Clarivate Plc
About CPA Global
Non-GAAP Financial Measures Related to Clarivate Plc Results
Basis of Presentation
The non-IFRS financial measures discussed herein are not recognized terms under, and should not be considered as a substitute for, financial measures calculated in accordance with IFRS. Our definitions of and method of calculating non-IFRS financial measures may vary from the definitions and methods used by other companies, which may limit their usefulness as a comparative measure. Our presentation of non-IFRS financial measures should not be construed as an inference that our future results will be unaffected by any of the adjusted items, or that our projections and estimates will be realized in their entirety or at all. In addition, because of these limitations, non-IFRS financial measures should not be considered as measures of liquidity or discretionary cash available to us to fund our cash needs, including investing in the growth of our business and meeting our obligations. See the Appendix to this press release for definitions of the non-IFRS measures used herein and a reconciliation to the most directly comparable IFRS measures.
Reconciliation to Certain Non-GAAP Measures
The following table presents Clarivate standalone calculation of Adjusted EBITDA for the Outlook for 2020 and reconciles this measure to our Net loss for the same period:
The following table presents Clarivate standalone calculation of Adjusted Diluted EPS for the Outlook for 2020 and reconciles these measures to our Net loss for the same period:
The following table presents Clarivate standalone calculation of Free Cash Flow and Adjusted Free Cash Flow for the Outlook for 2020 and reconciles this measure to our Net cash provided by operating activities for the same period:
CPA Global Reconciliation to Certain Non-IFRS Measures
The following table presents CPA Global's calculation of Adjusted EBITDA as of December 31, 2019 and reconciles this measure to CPA Global's Net loss for the same period:
1 Non-GAAP measure. Please see "Reconciliation to Certain Non-GAAP measures" in this press release for important disclosures and reconciliations of these financial measures to the most directly comparable GAAP measure. These terms are defined elsewhere in this release.