Arizona-based Verra Mobility, a portfolio company of Platinum Equity, has agreed to merge with Gores Holdings II, a blank check company sponsored by The Gores Group LLC. The deal consideration consists of cash and shares of Gores Holdings, to be paid from $400 million held in cash and a $400 million private placement led by Alec Gores, GIC, Hamilton Lane and Northwestern Mutual. At the closing of the deal, Verra Mobility will be a publicly listed company. Verra Mobility is a provider of smart transportation solutions.
LOS ANGELES–(BUSINESS WIRE)–Verra Mobility (“Verra Mobility” or the “Company”), the leading provider of tech-enabled smart transportation solutions and a portfolio company of Platinum Equity, announced it has entered into a definitive agreement and plan of merger with Gores Holdings II, Inc. (“Gores Holdings II”) (NASDAQ CM: GSHT, GSHTU, and GSHTW), a special purpose acquisition company sponsored by an affiliate of The Gores Group, LLC (“The Gores Group” or “Gores”). Upon closing, this transaction will introduce Verra Mobility as a publicly listed company, with an anticipated initial enterprise value of approximately $2.4 billion or 11.0x the Company’s estimated 2018 pro forma Adjusted EBITDA of approximately $219 million.
The consideration payable to the stockholders of Verra Mobility will consist of a combination of cash and shares of Gores Holdings II common stock. In addition to the $400 million of cash held in Gores Holdings II’s trust account, additional investors have committed to participate in the transaction through a $400 million private placement, led by Alec Gores, Chairman and CEO of The Gores Group, and including large institutional investors such as GIC, Hamilton Lane and Northwestern Mutual. Upon completion of the transaction, including the private placement, Platinum Equity and other minority owners of Verra Mobility expect to hold approximately 42% of the newly public Verra Mobility, subject to various purchase price adjustments.
Verra Mobility is a global leader in smart mobility, serving the world’s largest commercial fleets and rental car companies in managing tolling transactions and violations for more than 8.5 million vehicles and operating more than 4,000 red-light, speed, and school bus stop arm safety cameras. Verra Mobility maintains its leadership position in the marketplace through meaningful scale and has demonstrated consistent revenue growth underscored by its differentiated transaction processing model.
“We are thrilled to start the next chapter in the Verra Mobility story alongside the Gores and Platinum teams,” said David Roberts, CEO of Verra Mobility. “Platinum Equity’s operational expertise ensured we had the resources we needed to diversify our product portfolio and position our company for future growth. This transaction benefits our company, our employees, our stockholders and most importantly our customers who rely on us to bring them smart transportation solutions that make mobility safer and easier. We are very excited to continue to grow Verra Mobility as a publicly listed company.”
Jacob Kotzubei, Partner at Platinum Equity, said, “Verra Mobility is an incredible success story and an excellent example of the effectiveness of Platinum’s integrated M&A&O approach. Through a combination of growth through acquisition and operational discipline, we partnered with management to rapidly transform the company. Today, Verra Mobility is a global enterprise that delivers a broad range of modern transportation services and solutions. We believe the company is well-positioned for continued growth and has a very bright future ahead.”
Mark Stone, CEO of Gores Holdings II, said, “Verra Mobility is our ideal partner given its remarkable business, proven management team and compelling growth opportunities ahead. At Gores, we pride ourselves in our operational roots and are excited that Verra Mobility fits our high standard for investment and offers a superior option for our stockholders. We look forward to partnering with Platinum, management and the board to continue the momentum Verra Mobility has achieved over the last several years and to take this business to the next level.”
Until recently, Verra Mobility was known as American Traffic Solutions, and was rebranded following the acquisitions of Highway Toll Administration and Euro Parking Collection, transactions that helped transform the business into a global enterprise with a broad range of transportation technology solutions. Verra Mobility is headquartered in Mesa, Arizona and currently operates in 15 countries.
Key Transaction Terms
The transaction will be effected pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), entered into by and among Gores Holdings II, Greenlight Holding II Corporation (Verra Mobility’s parent) and the other parties thereto. Concurrently with the consummation of the transaction, additional investors will purchase shares of common stock of Gores Holdings II in a private placement. After giving effect to any redemptions by the public stockholders of Gores Holdings II, the balance of the approximately $400 million in cash held in Gores Holdings II’s trust account, together with the $400 million in private placement proceeds, will be used to pay cash consideration to certain stockholders of the Company, pay transaction expenses and reduce Verra Mobility’s existing indebtedness to 3.9x 2018 estimated pro forma Adjusted EBITDA. The remainder of the consideration payable to the stockholders of Verra Mobility will consist of shares of Gores Holdings II common stock.
In order to facilitate the transaction, Gores Holdings II’s sponsor has agreed to cancel a portion of the 10,000,000 founder shares. As a result of such cancellation, the acquisition of shares of common stock of Gores Holdings II in the private placement will be issued at a discount. In addition, the shares of Gores Holdings II common stock received by the stockholders of the Company in the transaction will be restricted from trading for at least 180 days following the completion of the transaction.
As part of the transaction, Gores Holdings II will also enter into a tax receivable agreement with certain stockholders of the Company, which will provide for the sharing of tax benefits relating to certain pre-transaction tax attributes as those attributes are realized by Gores Holdings II.
The transaction has been unanimously approved by the boards of directors of both Gores Holdings II and the Company, and is expected to close in the third quarter of 2018, subject to customary closing conditions, including the receipt of regulatory approval, and approval of the stockholders of Gores Holdings II. Upon closing of the transaction, the name of Gores Holdings II will be changed to Verra Mobility Corporation.
Deutsche Bank Securities Inc. acted as lead capital markets advisor, lead private placement agent, and financial advisor to Gores Holdings II. Goldman, Sachs & Co acted as joint capital markets advisor and joint private placement agent and financial advisor along with Moelis & Company and Credit Suisse LLC as financial advisors. Weil, Gotshal & Manges LLP acted as legal advisor to Gores Holdings II. Gibson, Dunn & Crutcher LLP acted as legal advisor to Platinum Equity and Verra Mobility.
Conference Call Information
Investors may listen to a presentation regarding the proposed transaction on Thursday, June 21, 2018, starting at 11:00 a.m. ET. The call can be accessed by dialing (888) 820-4544 (domestic toll-free number) or (471) 279-3876 (international) and providing the conference ID: 89361, or asking for the Gores transaction announcement call.
A replay of the teleconference and webcast will also be available from June 21, 2018 at 2:00 p.m. ET to June 28, 2018 at 11:59 p.m. ET. The replay can be accessed by dialing (800) 839-5128 (domestic toll-free number) or (402) 220-1504 (international).
About Verra Mobility
Verra Mobility is a global leader in smart mobility. The Company develops technology-enabled solutions that help the world move safely and easily. The Company serves the world’s largest commercial fleets and rental car companies to manage tolling transactions and violations for more than 8.5 million vehicles. Verra Mobility is a leading provider of connected systems, processing nearly 165 million transactions each year through connectivity with more than 50 individual tolling authorities and more than 400 issuing authorities. Verra Mobility fosters the development of safe cities, working with police departments and municipalities by operating more than 4,000 red-light, speed, and school bus stop arm safety cameras. Arizona-based Verra Mobility Corporation currently operates in 15 countries and in 18 languages. For more information, visit VerraMobility.com.
About Gores Holdings II, Inc.
Gores Holdings II is a special purpose acquisition company sponsored by an affiliate of The Gores Group, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Gores Holdings II completed its initial public offering in January 2017, raising approximately $400 million in cash proceeds. Gores Holdings II’s officers and certain of its directors are affiliated with The Gores Group. Founded in 1987 by Alec Gores, The Gores Group is a global investment firm focused on acquiring controlling interests in mature and growing businesses which can benefit from the firm’s operating experience and flexible capital base. Over its 30 year history, The Gores Group has become a leading investor having demonstrated a reliable track record of creating value in its portfolio companies alongside management. Headquartered in Los Angeles, The Gores Group maintains offices in Boulder, CO, and London. For more information, please visit www.gores.com.
About Platinum Equity
Founded in 1995 by Tom Gores, Platinum Equity is a global investment firm with $13 billion of assets under management and a portfolio of more than 30 operating companies that serve customers around the world. The firm is currently investing from Platinum Equity Capital Partners IV, a $6.5 billion global buyout fund. Platinum Equity specializes in mergers, acquisitions and operations – a trademarked strategy it calls M&A&O® – acquiring and operating companies in a broad range of business markets, including manufacturing, distribution, transportation and logistics, equipment rental, metals services, media and entertainment, technology, telecommunications and other industries. Over the past 23 years Platinum Equity has completed more than 200 acquisitions.