Digital commerce technology company mdf commerce announced it has entered into an arrangement agreement to be acquired by funds managed by KKR in an all-cash transaction. Upon completion of the deal, mdf commerce will become a privately held company.
mdf commerce’s platforms and services enable businesses worldwide, supporting them in generating billions of dollars in transactions on an annual basis. mdf commerce’s North American e-procurement platform serves 6,500+ government agencies and over 650,000+ suppliers across Canada and the United States.
After the closing of the deal, KKR will support mdf commerce by creating an equity ownership program to provide employees the opportunity to participate in the benefits of ownership of the company. This strategy is based on the stance that employee engagement is a major driver in building companies. Since 2011, KKR portfolio companies have been awarded billions of dollars of total equity value to over 60,000 non-management employees across 40+ companies.
KKR’s investment in mdf commerce is being made through its Ascendant Strategy – which invests in middle market businesses in North America as part of KKR’s Americas Private Equity platform.
These are the highlights of the deal:
1.) Premium for shareholders – Consideration of C$5.80 per issued and outstanding common share of mdf commerce, payable entirely in cash, represents a premium of about 58% to the closing price of the common shares on the Toronto Stock Exchange (TSX) on March 8, 2024 of C$3.68 per common share, a premium of about 59% to the 20-day volume-weighted average share price on the TSX for the period ending on March 8, 2024 of C$3.65 per common share, and a 30% premium to the 52-week high price on the TSX of C$4.45 per common share achieved on December 8, 2023
2.) Immediate liquidity – The shareholders of mdf commerce will receive a price of C$5.80 per common share, payable entirely in cash, which provides certainty of value and immediate liquidity;
3.) Alignment with major shareholders—KKR is closely aligned with mdf commerce’s management in a shared vision for the company’s future. KKR will utilize the expertise of the existing management team led by Luc Filiatreault, President and Chief Executive Officer, to continue supporting mdf commerce’s growth strategy and build a global leader headquartered in Québec.
Scotiabank is the company’s exclusive financial advisor, and Desjardins provides an independent fairness opinion to the Board of Directors. McCarthy Tétrault LLP and Foley & Lardner LLP are the company’s legal advisors. Stikeman Elliott LLP and Dechert LLP are acting as KKR’s legal advisors.
KEY QUOTES:
“After a comprehensive strategic review process, we are pleased to have reached an agreement with KKR that provides immediate liquidity and certainty of value at an attractive premium to our shareholders.”
– Pierre Chadi, Chairman of mdf commerce’s board of directors
“We are excited to strategically partner with KKR to accelerate our expansion and scale our industry-leading platform even further. We look forward to leveraging their relationships, resources, and expertise as we execute on our strategy and explore new projects and opportunities that will improve mdf commerce’s service offering and continue growing market share. KKR has a long history of successfully investing in market-leading software businesses globally. I am confident that KKR is the ideal partner for mdf commerce and can contribute to the Company’s continued success.”
– Luc Filiatreault, President and Chief Executive Officer, mdf commerce
“KKR is closely aligned with management’s vision to accelerate technology innovation across the broader mdf commerce platforms. We look forward to the enormous opportunity ahead for the mdf commerce eProcurement platform as governments increasingly embrace digital solutions. We have been impressed with the business that Luc and team have built in Montreal and are delighted to welcome one of the leading technology companies in Quebec to the KKR family.”
– John Park, Partner at KKR
