Vertex, Inc. Announces Offer to Acquire E-Invoicing Leader
Pagero
Vertex, Inc. (NASDAQ: VERX), a global provider of indirect tax
solutions, today announced that it has commenced a public tender
offer for 100% of the shares of Pagero Group AB (publ) (“Pagero”)
at a price of 36 SEK in cash per share, equivalent to a total
tender value of approximately $555 million1.
Vertex’s acquisition of Pagero will accelerate the companies’
partnership announced in October 2023 to provide multinational
companies with an end-to-end solution to automate business
transactions and manage indirect tax, reporting and e-invoicing
compliance globally. E-invoicing has quickly become a necessity for
businesses transacting in multiple jurisdictions with the rise of
real-time and near-real time digital tax reporting government
mandates. Pagero provides comprehensive solutions to automate
e-invoicing compliance through its Smart Business Network.
Leveraging Pagero’s platform and global network, Vertex will
extend its leadership by adding new digital transformation and
e-invoicing capabilities to its portfolio to support customers in
the rapidly changing, regulatory compliance landscape. The combined
platform will help customers seamlessly facilitate the creation,
exchange, and clearance of jurisdictionally-compliant e-invoices,
enabling companies to reduce friction and other barriers to
geographic expansion, and improve efficiency of their compliance
and reporting operations.
“Vertex and Pagero have a shared vision to accelerate global
commerce and help companies automate and digitize their compliance
operations,” noted Vertex CEO David DeStefano. “Since the launch of
our commercial partnership, we have seen strong reception from
customers and partners. E-invoicing has become one of the fastest
growing challenges facing our global enterprise customers, making
this transaction a logical next step. We are confident that
together, we will create a best-in-class solution for all indirect
tax and e-invoicing needs to help customers navigate complex and
evolving compliance mandates, expand our international reach, and
unlock additional value for shareholders.”
“Vertex has been a great partner in Pagero’s work to address
pressing customer needs for best-in-class tax compliance
solutions,” said Bengt Nilsson, Pagero’s second largest shareholder
and CEO. “With the rapid emergence of new and proposed e-invoicing
mandates and the digitization of indirect tax, e-invoicing has
quickly become a necessity for businesses trading in multiple
global jurisdictions. By combining Vertex and Pagero’s leading
technologies, I am convinced we can better support customers while
delivering meaningful value for shareholders.”
Strategic and Financial Benefits of the Proposed
Acquisition
Vertex believes acquiring Pagero will provide significant
benefits to stakeholders of the combined company, including:
- Significantly Expands Market Opportunity: The
e-invoicing market is large and growing, driven by legislation and
an increasingly complex compliance environment for companies to
navigate. By extending its leadership into e-invoicing through
Pagero, Vertex expects to expand its market opportunity from $22
billion to nearly $28 billion2 with considerable upside
opportunities as the company helps customers navigate evolving
compliance mandates globally.
- Advances International Growth Strategy: Today,
Pagero supports a network of approximately 14 million companies
across 140 countries. The business’ opportunity is rapidly
expanding as more than 50 countries have currently adopted or are
expected to adopt Continuous Transaction Controls (“CTC”) mandates.
To address these requirements, customers are seeking solutions that
simplify their returns and reporting processes. Vertex expects to
capitalize on this demand by leveraging Pagero’s e-invoicing
solutions for existing customers and as an entry point for new
customer acquisition.
- In-Demand, Strategically Aligned Solutions to Manage
Tax Compliance in the Digital Era: CTC and e-invoicing are
key components in streamlining compliance processes and ensuring
timely and accurate reporting. Through this transaction, Vertex
will create a seamless, end-to-end compliance platform combining
indirect tax, periodic filing and reporting and e-invoicing, with a
scalable, open business network that will enable continuous
compliance and operational efficiencies across the procure-to-pay
and order-to-cash processes.
- Meaningful Growth Opportunities: Pagero
delivered year over year growth of 35% in its most recent fiscal
quarter, and enjoys strong customer retention metrics. The
transaction is expected to unlock additional value as the combined
company supports customers at more points through their compliance
processes globally. Vertex expects that deepening and expanding
customer relationships will drive increased revenue growth.
- Enhanced Financial Profile: Vertex expects the
acquisition of Pagero to accelerate the Company’s pro-forma
top-line growth by nearly 200 basis points, with a near-term path
to profit margin expansion. Pagero is expected to be accretive to
Vertex’s margins in the second full year after closing, with
additional opportunity to increase revenue synergies and cost
benefits in the medium to long term.
Vertex has been informed by the independent bid committee of the
Board of Directors of Pagero of its resolution to unanimously
recommend the shareholders of Pagero to accept the public offer
made by Vertex. Vertex has also received irrevocable undertakings
to accept the Offer from Pagero’s two largest shareholders –
Vålåuggen Invest AB which is controlled by Summa Equity and
Greenfield AB and Norelia AB which are both controlled by Pagero’s
CEO Bengt Nilsson – in total representing approximately 40.4
percent of the outstanding shares in Pagero.
Transaction DetailsThe acceptance period of the
offer is expected to commence on or around December 15, 2023 and
expire on or around January 23, 2024. An offer document is expected
to be made public on or around December 14, 2023. Assuming that the
offer is declared unconditional after the acceptance period,
settlement is expected to begin on or around February 1, 2024.
The offer is subject to certain regulatory approvals, the
receipt of valid tenders of more than 90% of Pagero’s shares and
customary closing conditions.
The per-share consideration noted above represents an
approximate 71.4 percent premium to Pagero’s closing price on
December 12, 2023, and a 77.1 percent premium to its prior 30-day
volume-weighted average price on the same day and a 97.9 percent
premium compared to the volume-weighted average price during the
last 90 trading days ended on December 12, 2023.
This press release shall not constitute an offer to buy or a
solicitation of an offer to sell any Pagero securities. The offer
will be made solely pursuant to the applicable offer document, when
available. The offer is not being made to holders of securities in
any jurisdiction in which the making or acceptance thereof would
not be in compliance with the securities, blue sky or other laws of
such jurisdiction. The full details of the offer, including
complete instructions on how to tender Pagero shares, will be
included in the offer document.
Financing DetailsVertex intends to fund the
transaction with proceeds from its existing undrawn revolving
credit facility and from issuance of a new series of Convertible
Preferred Stock in the amount of $500 million to Silver Lake, the
global leader in technology investing. Vertex welcomes Silver Lake
not only as an investor but also as a strategic partner as Vertex
expands its growth ambitions across technologies and
geographies.
Joe Osnoss, a Managing Partner of Silver Lake, will join the
Vertex Board of Directors upon transaction close.
Osnoss said, “Silver Lake has long regarded Vertex as an
important pioneer, innovator and leader in enterprise technology
solutions for global indirect tax compliance. Adding e-invoicing
via Pagero will provide even more value to customers seeking
end-to-end integration and automation. We are grateful for the
opportunity to work with CEO David DeStefano and Vertex’s
management in developing a long-term partnership between our
firms.”
The issuance of the Convertible Preferred Stock is conditioned
upon closing the acquisition. It carries a payment-in-kind dividend
of 11.75% and is convertible into Vertex common stock at an initial
conversion price equal to a 20% premium over Vertex’s trailing
10-day volume-weighted average price as of December 19, 2023,
subject to a minimum conversion price of $32.50 and a maximum of
$37.50. The Convertible Preferred Stock is redeemable on the terms
and subject to the conditions set forth in the definitive
agreements. As part of the transaction, Silver Lake will also be
issued warrants to purchase up to 2.5 million additional shares of
Vertex common stock at the conversion price. Vertex intends to file
a Current Report with the Securities and Exchange Commission on
Form 8-K that will have further details concerning the acquisition
and the related financings.
Conference callVertex will host a conference
call at 8:30 AM ET / 2:30 PM CET today, December 13, 2023, to
discuss the Pagero tender offer.
Those wishing to participate may do so by dialing 1-877-407-4018
or 1-201-689-8471 approximately ten minutes prior to start time. A
listen-only webcast of the call will also be available through the
Company’s Investor Relations website at
https://ir.Vertexinc.com.
A conference call replay will be available approximately one
hour after the call by dialing 1-844-512-2921 or 1-412-317-6671 and
referencing passcode 13743202, or via the Company’s Investor
Relations website. The replay will expire on December 27, 2023 at
11:59 p.m. Eastern Time.
AdvisorsGreenhill acted as financial advisor
and DLA Piper acted as legal advisor to Vertex. Centerview Partners
LLC acted as financial advisor and Latham and Watkins LLP as legal
advisor to Vertex in connection with the investment by Silver
Lake.
Simpson Thacher & Bartlett LLP acted as legal advisor to
Silver Lake.
About VertexVertex, Inc. is a leading global
provider of indirect tax solutions. The Company’s mission is to
deliver the most trusted tax technology enabling global businesses
to transact, comply and grow with confidence. Vertex provides
solutions that can be tailored to specific industries for major
lines of indirect tax, including sales and consumer use, value
added and payroll. Headquartered in North America, and with offices
in South America and Europe, Vertex employs over 1,400
professionals and serves companies across the globe.
For more information, visit www.Vertexinc.com or follow on
Twitter and LinkedIn.
About Silver LakeSilver Lake is a global
technology investment firm, with more than $95 billion in combined
assets under management and committed capital and a team of
professionals based in North America, Europe and Asia. Silver
Lake’s portfolio companies collectively generate more than $282
billion of revenue annually and employ approximately 713,000 people
globally.
Forward Looking Statements
Any statements made in this press release that are not
statements of historical fact, including statements about our
beliefs and expectations, are forward-looking statements and should
be evaluated as such. Forward-looking statements include, among
other things, statements about the anticipated benefits of the
Pagero acquisition, the timing of completion of the Pagero
acquisition and the issuance of the Convertible Preferred Stock and
warrants, as well as the information concerning possible or assumed
future results of operations, including descriptions of our
business plan and strategies. Forward-looking statements are based
on Vertex management’s beliefs, as well as assumptions made by, and
information currently available to, them. Because such statements
are based on expectations as to future financial and operating
results and are not statements of fact, actual results may differ
materially from those projected. Factors which may cause actual
results to differ materially from current expectations include, but
are not limited to: our ability to complete the Pagero on the
currently contemplated terms or at all; the outcome of any legal
proceedings, regulatory proceedings or enforcement matters that may
be instituted relating to the anticipated acquisition; the costs
incurred to consummate the Pagero acquisition; the possibility that
the expected benefits from the acquisition will not be realized, or
will not be realized within the expected time period; difficulties
related to the integration of the two companies; disruption from
the Pagero acquisition making it more difficult to maintain
relationships with customers, employees, regulators or suppliers;
the diversion of management time and attention on the anticipated
acquisition; adverse changes in the markets in which Vertex and
Pagero operate; our ability to complete the financing for the
acquisition on the contemplated terms, or at all; our ability to
sustain and expand revenues, maintain profitability, and to
effectively manage our anticipated growth; our ability to maintain
and expand our strategic relationships with third parties; and the
other factors described under the heading “Risk Factors” in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2022 as filed with the Securities Exchange Commission (“SEC”),
as may be subsequently updated by our other SEC filings. Copies of
such filings may be obtained from the Company or the SEC.
All forward-looking statements reflect our beliefs and
assumptions only as of the date of this press release. We undertake
no obligation to update forward-looking statements to reflect
future events or circumstances.
_______________________1 Based upon ~161 million currently
outstanding shares of Pagero and a USD / SEK exchange rate of
10.46.2 Based on Vertex estimates
Contacts:
Vertex Investor Relations contact:Joe
CrivelliVertex, Inc.ir@Vertexinc.com
Media contact:Rachel LitcofskyVertex,
Inc.mediainquiries@Vertexinc.com
Silver Lake Media contact:Matt BensonSilver
Lake mediainquiries@silverlake.com
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