WeCommerce Announces Closing of Acquisition of Stamped
WeCommerce Holdings Ltd. (TSX-V: WE) ("WeCommerce" or the "Company") announced today the successful closing of the previously-announced acquisition of substantially all of the assets of Stamped.io Pte. Ltd. ("Stamped") for up to US$110 million (collectively, the "Acquisition").
Stamped offers a leading suite of software which enables Shopify merchants to collect and feature customer reviews and product ratings, and to create their own loyalty and rewards programs, which facilitate customer conversion and retention. Despite Stamped's leadership position, the Company believes there are substantial opportunities to optimize Stamped's business by accelerating customer acquisition and deploying WeCommerce's best practices.
The Acquisition is expected to be accretive to WeCommerce's consolidated revenues, organic revenue growth, and operating margins while substantially increasing the proportion of the Company's revenues that is generated from recurring subscription revenue streams. We expect to file audited financial statements of Stamped shortly after closing. As previously announced, we plan to host an investor presentation and Q&A session shortly after that additional information becomes available.
"We are thrilled to officially welcome Stamped to the WeCommerce family," said Chris Sparling, CEO of WeCommerce. "We are extremely excited about Stamped's growth potential in the years ahead."
"WeCommerce is the perfect partner to help grow Stamped into a leading provider of customer engagement solutions for online merchants globally." said Tommy Ong, Founder of Stamped.
On closing of the Acquisition, WeCommerce paid Stamped upfront consideration of (i) US$75 million in cash; and (ii) US$10 million through the issuance of 496,697 Class A common shares of WeCommerce (the "Common Shares") at a price of C$25.43. The upfront cash portion of the consideration was funded with approximately US$35 million of cash on hand and approximately US$40 million of borrowings under the Company's new senior secured credit facility (the "Credit Facilities") led by JPMorgan Chase Bank, N.A. Toronto Branch ("JPMorgan Chase"). Further details on the Credit Facilities are provided below.
In addition to the upfront consideration of US$85 million, WeCommerce may be required to pay Stamped a further US$25 million (the "Contingent Consideration") in the first quarter of 2022 if, among other things, Stamped achieves a minimum revenue target in 2021 of US$10 million. If payable, the Contingent Consideration will be satisfied, at WeCommerce's sole discretion, in either cash, the issuance of Common Shares to Stamped, or a combination thereof.
Immediately prior to the closing of the Acquisition, WeCommerce entered into a credit agreement (the "Credit Agreement") with a syndicate of lenders led by JPMorgan Chase. The Credit Facilities comprise: (i) a senior revolving credit facility in an aggregate principal amount of US$20 million, (ii) a senior term loan facility in an aggregate principal amount of US$40 million; and (iii) a senior delayed draw term loan facility in an aggregate principal amount of US$20 million.
All obligations of WeCommerce under the Credit Facilities are guaranteed by its material wholly-owned subsidiaries (including its subsidiary that acquired the assets of Stamped) (the "Guarantors"), and secured by a security interest in the assets of WeCommerce and the Guarantors and WeCommerce's equity interests in the Guarantors. The Credit Agreement contains certain customary financial and non-financial covenants. The Credit Facilities will mature on April 6, 2026, being the fifth anniversary of the date of th Credit Agreement.
In addition to financing the Acquisition, WeCommerce plans to use the proceeds of the Credit Facilities: (i) to finance the working capital needs and for general corporate purposes of the Company and its subsidiaries in the ordinary course of business; and (ii) to finance future acquisitions.
Prior to borrowing under the Credit Facilities, WeCommerce used cash on hand to fully repay the existing indebtedness of one of its subsidiaries, Pixel Union Design Ltd. in the amount of approximately C$11.4 million.
About WeCommerce Holdings Ltd.
WeCommerce is a Canadian ecommerce technology holding company that owns a family of companies and brands in the Shopify partner ecosystem, including, Pixel Union, Out of the Sandbox, Yopify, SuppleApps, Rehash and Foursixty. The Company's primary focus is to build, grow and acquire businesses that serve the Shopify Partner ecosystem. These businesses consist largely of SaaS (News - Alert), Digital Goods and Services businesses. Generally, these businesses build Apps and Themes and run Agencies that support Shopify merchants.
WeCommerce is focused on acquiring businesses with growth potential, a sustainable competitive advantage and that are, or have the potential to become, a leader within their particular market. The Company targets businesses within the Shopify ecosystem due to its confidence in the Shopify platform, the fragmented nature of the ecosystem and the attractive economics that the businesses generally exhibit. As one of Shopify's first partners since 2010, WeCommerce believes it is well positioned to continue to identify acquisition opportunities in the Shopify Partner ecosystem.
Cautionary Note Regarding Forward-Looking Information
This press release contains statements which constitute "forward-looking statements" and "forward-looking information" within the meaning of applicable securities laws (collectively, "forward-looking statements"), including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities and operating performance. Forward-looking statements are often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions and forward-looking statements in this news release includes, but is not limited to, information and statements regarding: the anticipated benefits of the Acquisition; the Company's revenue and cash flow upon completion of the Acquisition, including the Company's expectation that a majority of its revenue will be recurring subscription revenue; the Company's belief that the Acquisition will provide significant value to shareholders; and expectations for other economic, business, and/or competitive factors.
Investors are cautioned that forward-looking statements are not based on historical facts but instead reflect the Company's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed thereon, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the Company. Financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to various risks as set out herein.
Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are the following: the potential impact of the consummation of the Acquisition on relationships, including with regulatory bodies, stock exchanges, lenders, employees and competitors; the diversion of management time on the Acquisition; assumptions concerning the Acquisition and the operations and capital expenditure plans of the Company following completion of the Acquisition; credit, liquidity and additional financing risks for the Company and its investees; stock market volatility; changes in e-commerce industry growth and trends; changes in the business activities, focus and plans of the Company and its investees and the timing associated therewith; the Company's actual financial results and ability to manage its cash resources; changes in general economic, business and political conditions, including challenging global financial conditions and the impact of the novel coronavirus pandemic; competition risks; potential conflicts of interest; changes in applicable laws and regulations both locally and in foreign jurisdictions; compliance with extensive government regulation; the risks and uncertainties associated with foreign markets; and the other risk factors more fully described in the Company's filing statement dated November 30, 2020 prepared in connection with its qualifying transaction, which has been filed with the Canadian securities regulators and is available on the Company's profile on SEDAR at www.sedar.com
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended and such changes could be material. The Company does not intend, and do not assume any obligation, to update the forward-looking statements except as otherwise required by applicable law.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
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