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.
Acquisition Overview
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.
Credit Facilities
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 the 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.
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