OMERS and Harvest Partners to take Epiq private in $1 bln buyout

OMERS Private Equity and Harvest Partners LP have agreed to acquire Epiq Systems Inc for $16.50 per share in cash or about $1 billion. Epiq will be combined with DTI, a legal processing outsourcing company, which is owned by OMERS. Credit Suisse Securities (USA) LLC is providing financial advice to Epiq Systems on the transaction while Wells Fargo Securities is doing likewise for DTI and OMERS Private Equity. Bank of America Merrill Lynch is acting as financial adviser to Harvest Partners. Epiq will stop trading on the NASDAQ after the deal closes, which is expected in the fourth quarter of this year. Based in Kansas City, Kansas, Epiq is a provider of integrated technology and services for the legal sector.

PRESS RELEASE

Kansas City, Kan. (July 27, 2016) — Epiq Systems, Inc. (“Epiq”) (NASDAQ: EPIQ), a leading global provider of integrated technology and services for the legal profession, today announced that it has entered into a definitive agreement to be acquired by OMERS Private Equity, the private equity arm of the OMERS pension plan, and funds managed by Harvest Partners, LP, a leading middle-market private equity fund, for $16.50 per share in cash. The transaction, which represents a 42% premium to Epiq’s unaffected closing share price of $11.63 as of February 19, 2016, the last trading day before a media report speculating about potential offers for the company, has a total value of approximately $1.0 billion including assumed debt obligations.

The Epiq board of directors unanimously approved the transaction and recommends that Epiq shareholders vote in favor of the transaction. Under the terms of the agreement, upon the closing of the transaction, Epiq shareholders will receive $16.50 in cash for each share of Epiq’s common stock. Upon completion of the transaction, Epiq will become a privately-held company and will be combined with DTI, a leading global legal process outsourcing (LPO) company majority-owned by OMERS and managed by OMERS Private Equity.

The proposed transaction is expected to close in the fourth quarter of 2016, subject to customary closing conditions including receipt of shareholder and regulatory approvals. The transaction requires the affirmative vote of the holders of at least two-thirds of the outstanding shares of Epiq’s common stock entitled to vote on the transaction, which will be sought at a special meeting of Epiq’s shareholders. Each of St. Denis J. Villere & Company, LLC and P2 Capital Partners, LLC, the two largest shareholders of the company, Tom W. Olofson, founder, chairman and chief executive officer of the company, and the company’s directors and other executive officers have signed voting support agreements in support of the transaction, representing approximately 38% of the total issued and outstanding shares of common stock of the company.

Douglas M. Gaston, the chairman of the Strategic Alternatives Committee of the Epiq Board of Directors, commented, “This transaction represents the successful culmination of a comprehensive review of strategic and financial alternatives to maximize value for all of Epiq’s shareholders. After careful consideration, the Board determined that this transaction with OMERS Private Equity and Harvest Partners represents the highest and best offer received, offering Epiq shareholders at closing with immediate cash value at a substantial premium.”

Olofson said, “We believe this transaction is in the best interest of our shareholders, clients, associates and business partners. OMERS Private Equity and Harvest Partners are two experienced and world-class investors that have an extensive understanding of the legal technology solutions and services industry. Our management team and colleagues look forward to the new opportunities for growth with DTI.”

Eric Haley, managing director of OMERS Private Equity, said, “Epiq and DTI are both recognized as excellent service providers and market innovators. This combination will produce a global firm with best-in-class solutions and significant opportunities for growth in the dynamic legal technology industry.” Michael Graham, Head of North America of OMERS Private Equity added, “This combination is indicative of the confidence we have in the DTI platform and the future of the legal process outsourcing industry and we are excited to partner with the Epiq team to enhance the growth of these two exceptional companies.”

“We are excited to invest in this combination of two global legal technology solutions and services companies,” said Andrew Schoenthal, managing director of Harvest Partners. “We are looking forward to once again partnering with John Davenport Jr. and DTI, and have great respect for Epiq and what they have accomplished,” added Ira Kleinman, senior managing director of Harvest Partners.

Combination of Epiq and DTI to Deliver Significant Benefits to Clients, Partners and Employees
The combination of Epiq and DTI is expected to deliver significant benefits to clients, partners and employees, including:
broadened range of service solutions and products
expanded geographic footprint
combined deep bench of expertise
bolstered data security protocols
commitment to exceptional client service, and
increased opportunities for employees.

John Davenport Jr., founder and chief executive officer of DTI, commented, “Epiq is an industry leader with significant growth potential and aligns perfectly with our objective of delivering excellence in legal process outsourcing wherever our clients operate. This combination will expand our platform in scope, geographic reach and innovative capabilities. As we plan to integrate the two businesses, we will continue to deliver the high-quality solutions and client-centric focus that our clients have come to expect.” Davenport continued, “We look forward to welcoming the Epiq management team and their talented employees in serving our combined global client base more effectively and efficiently than ever before.”

Brad D. Scott, president and chief operating officer of Epiq, said, “This combination brings together two highly complementary legal services and technology companies with global reach and deep expertise. With the support of Omers Private Equity and Harvest Partners, we have the opportunity to leverage each company’s strengths to create a combined entity well positioned to be the world’s preferred strategic partner for complex and outsourced legal matters. We are excited to work with the DTI team to enhance the value of all of our service offerings to clients worldwide.”

Credit Suisse Securities (USA) LLC is serving as exclusive financial advisor to Epiq Systems and Kirkland & Ellis LLP is serving as legal counsel. Wells Fargo Securities is serving as exclusive financial advisor to DTI, and Weil, Gotshal & Manges LLP and Bryan Cave LLP are serving as legal counsel. Wells Fargo Securities is serving as exclusive financial advisor to OMERS Private Equity and Weil, Gotshal & Manges LLP is serving as legal counsel. BofA Merrill Lynch is serving as exclusive financial advisor to Harvest Partners and White & Case LLP is serving as legal counsel. Bank of America Merrill Lynch and Goldman Sachs are joint lead arrangers and joint bookrunners for the credit facilities.

About Epiq
Epiq (NASDAQ: EPIQ) is a leading global provider of integrated technology and services for the legal profession, including eDiscovery, managed services, bankruptcy, class action and mass tort administration, federal regulatory actions and data breach responses. Our innovative solutions are designed to streamline the administration of litigation, investigations, financial transactions, regulatory compliance and other legal matters. Epiq’s subject-matter experts bring clarity to complexity, create efficiency through expertise and deliver confidence to our clients around the world.

For more information, visit us at www.epiqsystems.com.

About OMERS Private Markets (“OPM”) and OMERS Private Equity
OMERS Private Markets (OMERS Private Equity and Borealis Infrastructure) invests globally in private equity and infrastructure assets on behalf of the OMERS pension plan. OMERS Private Equity’s investment strategy involves active ownership of a portfolio of industry-leading businesses across North America and Europe. Through partnership with world class management teams and delivering on growth strategies, OMERS Private Equity’s investments are aimed at generating strong returns to help deliver secure and sustainable pensions to OMERS members. Recent OMERS Private Equity transactions include the acquisition of Forefront Dermatology, Kenan Advantage Group, and ERM Partners and the successful sale of Marketwired. OPM has offices in Toronto, New York, London and Sydney. OMERS is one of Canada’s largest pension funds with net assets of CAD$77 billion. For more information, please visit www.omerspe.com or www.omersprivatemarkets.com

About Harvest Partners
Founded in 1981, Harvest Partners, LP, (www.harvestpartners.com) is a leading New York-based private equity investment firm with over $5.0 billion in cumulative capital commitments that pursues management buyouts and recapitalizations of middle market companies in North America. Harvest focuses on acquiring profitable companies in the business services and consumer, healthcare services, industrial services, and manufacturing and distribution sectors. For more information, please visit www.HarvestPartners.com.

About DTI
DTI is a leading legal process outsourcing (LPO) company serving law firms, corporations and government entities around the globe. DTI helps its clients accelerate the changes they must make to remain competitive. DTI is a leader in the management of information and processes. The company manages risks and minimizes costs associated with complex litigation and compliance functions. DTI is among the most experienced providers of eDiscovery, litigation support and court reporting. To learn more about DTI’s global footprint, flexibility, capacity and world-class project management, visit www.DTIGlobal.com.