ISS on board with Acasta Enterprises’ $1.1 bln acquisition deals

Acasta Enterprises Inc (TSX: AEF), a Canadian special purpose acquisition corporation, said that Institutional Shareholder Services Inc (ISS) has recommended approval of its acquisition of three businesses and its launch as a private equity firm. The deals, announced last month, will see Acasta buy Apollo Health & Beauty Care, JemPak Corp and Stellwagen Finance Co. Acasta estimates the deals will have an aggregate enterprise value of at least $1.1 billion at closing. ISS is quoted as saying “the combined valuation of the initial portfolio and the private equity platform offers a significant upside for the company’s public shareholders.”


Acasta Enterprises Inc. announces ISS endorsement of its qualifying acquisition and filing of final prospectus

TORONTO, Dec. 6, 2016 /CNW/ – Acasta Enterprises Inc. (TSX: AEF) (“Acasta”) today announced that leading shareholder advisory firm Institutional Shareholder Services Inc. (“ISS”) has recommended approval of Acasta’s qualifying acquisition (the “Qualifying Acquisition”) of 100% of three businesses in two highly attractive sectors, alongside its launch as a long-term investment and private equity management firm.

Acasta also announced that it has received a receipt for its final non-offering prospectus in connection with the Qualifying Acquisition.

ISS Endorsement

In a report issued on December 5, 2016, ISS recommends that shareholders of Acasta vote FOR the approval of the Qualifying Acquisition. ISS comments that: “…if the company’s forecasts are accurate, the combined valuation of the initial portfolio and the private equity platform offers a significant upside for the company’s public shareholders,” in part of its report.

ISS also comments that: “…the proposed transaction makes strategic sense as it creates a portfolio with attractive platforms for growth in the strategically differentiated and distinct businesses that have strong management teams and that are being bought at compelling valuations. […] Moreover, the private label consumer staples platform might benefit from synergies related to cost optimization and cross-selling opportunities.”

With regards to Acasta’s contribution to the intial portfolio and transition to an asset manager, ISS comments that: “The company’s management team is expected to provide significant contributions to both of the acquired platforms. […] In addition, the acquisitions will enable the company to transform into a long-term investment and private equity management firm, which is expected to generate substantial management fees and carried interests.”

The Qualifying Acquisition

The Qualifying Acquisition has an aggregate enterprise value of at least $1.1 billion at closing. Acasta estimates that, based on 2017 estimated results, the post-closing per share net asset value (NAV) ranges from approximately $11.43 to $14.45, the per warrant Black-Scholes value ranges from $3.20 to $5.37, and notes that the value attributable to the private equity business and the commercial aircraft funds could significantly increase Acasta’s NAV per share in excess of these figures.

Aligned Structure

The owners and management teams of the three businesses are remaining in their current roles and will receive up to 64% of their consideration in Acasta shares, ensuring a strong alignment with Acasta shareholders and a commitment to continuing to build their respective businesses;
Acasta founders are demonstrating their confidence in the qualifying acquisition by voluntarily doubling their at risk promote shares from 25% to 50%, increasing the price hurdle for these shares from $13.00 to at least $15.00; and
Acasta founders have committed to buy an additional $15 million of Class B shares of Acasta at $10.00 per Class B share, raising their total commitment to Acasta to over $30 million, including their investment at the time of Acasta’s initial public offering.
Shareholders Meeting and Closing

Acasta’s special meeting of shareholders (the “Meeting”) to approve the Qualifying Acquisition is scheduled for December 20, 2016. We expect the Qualifying Acquisition to be completed in early January 2017, subject to the satisfaction of certain conditions as set out in the purchase agreements for the three businesses.

The prospectus and the information circular in respect of the Meeting are available under Acasta’s profile on SEDAR at

About Acasta Enterprises Inc.

Acasta is a special purpose acquisition corporation that raised $402.5 million in its initial public offering of Class A restricted voting units of Acasta, in July 2015, with the purpose of effecting a qualifying acquisition. Following the Qualifying Acquisition, Acasta will become a private equity manager and will launch a private equity fund to pursue further market opportunities.

For further information: Richard Smith, Chief Operating Officer and Chief Financial Officer, Telephone No.: 647-725-6707

Photo courtesy of Airline Finance Corp, an operating company of Stellwagen Finance Co