TIDMCRW
RNS Number : 0846B
Craneware plc
07 June 2021
THIS ANNOUNCEMENT, INCLUDING THE INFORMATION CONTAINED HEREIN,
IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE, DISTRIBUTION OR
FORWARDING, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO
THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH
AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE
OR DISTRIBUTION WOULD BE UNLAWFUL.
FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND
DOES NOT CONSTITUTE AN OFFER OF SECURITIES IN ANY JURISDICTION.
PLEASE SEE THE IMPORTANT NOTICES AT THE OF THIS ANNOUNCEMENT.
For immediate release
LEI: 213800O2CTJ1YFXNXG05
7 June 2021
Craneware plc
("Craneware", the "Company" or the "Group")
Acquisition of SDS Holdco, Inc. ("Sentry")
Introduction
Craneware (AIM: CRW.L), a market leader in Value Cycle solutions
for the US healthcare market, today announces that it has entered
into a conditional agreement to acquire Sentry for an aggregate
consideration of $400 million (on a cash free / debt free basis)
(the "Acquisition").
The Acquisition represents a strategically important transaction
for Craneware.
Highlights of the Acquisition
-- Sentry, the ultimate holding company of Sentry Data Systems,
Inc., a private company headquartered in Deerfield Beach, Florida
(US), is a leading provider of SaaS solutions which simplify the
complexity of pharmacy procurement, utilisation and 340B regulatory
compliance in order to maximise cost savings, improve patient
outcomes and ensure precise regulatory compliance. Sentry also
provides business intelligence and SaaS analytics solutions and
consulting services.
-- Sentry has a customer base of some 10,000 hospitals,
pharmacies and clinics, including over 600 US hospitals (of which
only approximately 35% overlap as existing Craneware
customers).
-- Sentry generated revenue of $92 million and adjusted EBITDA
of $23 million (unaudited) for its financial year ending 31
December 2020.
-- The Acquisition represents a compelling strategic fit for Craneware due to:
o the enhancement of Craneware's focus on pharmacy operations
within healthcare providers, the largest cost area for US hospitals
outside the workforce, and extending the reach of the Pharmacy
Chargelink product family with the retail and contract speciality
pharmacies data for those providers and their communities;
o the complementary strengths of Sentry's business model - a
SaaS model with recurring revenues due to its long-term customer
relationships and high contract renewal rates;
o the significant cross-selling opportunities provided by the
complementary nature of Sentry's product suite and customer
base;
o the commercialisation opportunity and enhancement to
Craneware's Trisus(R) product suite provided by Sentry's 147
million unique longitudinal patient records collected over a 17
year period; and
o the scale created by the enlarged business.
-- The consideration for the Acquisition is being satisfied as
to $312.5 million (as adjusted) in cash and as to $87.5 million by
the issue of shares in the Company to the vendor of Sentry (the "
Consideration Shares " ).
o Various ABRY Partners funds hold approximately 88.8% of the
economic interest in the vendor of Sentry, with the remainder held
by Sentry management / Sentry management related vehicles and
individual shareholders.
-- The cash consideration will be funded from the Group's
existing cash resources, a new debt facility of up to $140 million
as detailed below and the net proceeds of an equity placing, to be
announced separately today (the "Placing").
-- The Consideration Shares, which are expected immediately to
be distributed by the vendor of Sentry to the underlying equity
holders of the vendor of Sentry, will be subject to the following
restrictions, in each case subject to customary exceptions:
o 6 month hard lock-up and subsequent 6 month orderly market
arrangements in respect ABRY Partners funds;
o 12 month hard lock-up and subsequent 12 month orderly market
arrangements in respect of members of Sentry management or
connected therewith.
-- The cash proceeds will be paid and the Consideration Shares
will be allotted to the vendor of Sentry upon completion of the
Acquisition, which is currently anticipated by early calendar Q3
2021. Application will be made for the Consideration Shares to be
admitted to trading on AIM.
-- The Acquisition is expected to be double-digit per cent.
accretive to Craneware's underlying adjusted earnings per share
("EPS") in the financial year ending 30 June 2022, before any
potential synergy benefits.
The Acquisition is subject to anti-trust clearance in the United
States and certain other customary conditions. The Acquisition will
represent a substantial transaction under Rule 12 of the AIM Rules
for Companies.
Keith Neilson, CEO of Craneware, commented:
" The acquisition of Sentry will provide immediate additional
scale to our operations, expanding our coverage of US hospitals,
enhancing our pharmacy offering and cementing Craneware's position
as a leading provider of value cycle solutions to the US healthcare
market.
Sentry's focus on the hospital link to community pharmacies adds
breadth and depth to our healthcare data, providing extra insight
into margin improvement opportunities within hospital operations
and pharmacy costs in particular. As the second largest cost centre
for hospitals after the workforce, this is an important area of
focus for hospital management teams, as they seek to deliver
greater value in healthcare.
Sentry's high levels of recurring revenues, customer retention
rates, and strong financial metrics, speak to the quality of the
business and the people that deliver their offering and we are
excited by the scope of the opportunity ahead . "
Enquiries:
Craneware plc
Keith Neilson, CEO
Craig Preston, CFO +44 (0)131 550 3100
Goldman Sachs International (Financial
Adviser)
Khamran Ali
Nick Harper
Tom Hartley
Tanguy Croguennoc +44 (0)20 7774 1000
Peel Hunt (NOMAD)
Dan Webster
George Sellar
Andrew Clark
Will Bell +44 (0)20 7418 8900
Alma (Financial PR) +44 (0)203 405 0205
Caroline Forde craneware@almapr.co.uk
Hilary Buchanan
Robyn Fisher
Joe Pederzolli
This Announcement is released by Craneware plc and contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) 596/2014 (MAR) (as transposed into the laws
of the United Kingdom), and is disclosed in accordance with the
Company's obligations under Article 17 of MAR.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055 (as transposed into the laws of the
United Kingdom), the person responsible for arranging for the
release of this Announcement on behalf of the Company is Craig
Preston, Chief Financial Officer.
Background to and reasons for the Acquisition
As set out in the Company's Interim Results announcement on 1st
March 2021 (for the 6 months ended 31 December 2020), the Company
has continued to make progress on its long-term strategic aim to
become ubiquitous in US hospitals, as the intelligence layer
sitting across all other systems, delivering the information
required to improve financial and operational performance. The
global pandemic has highlighted the importance of usable financial
and operational data and the Board believes this will drive further
investment by US hospitals in the future, resulting in multiple new
sales opportunities for the Group.
In addition to the progress towards more normal sales cycles and
the accelerated growth drivers supporting platform adoption, the
Group recognises the further opportunity presented by the stress in
healthcare service providers, which may have been less able to
easily navigate the disruption created by the economic uncertainty
of the pandemic in adjacent operational areas to those historically
serviced by the Group.
This has resulted in the opportunity to acquire Sentry in order
to further penetrate the pharmacy and supplies market via retail
and contract pharmacies associated with healthcare providers.
Sentry was founded in the US in 2003 by current CEO Travis
Leonardi, and was acquired by various ABRY Partners funds in 2015.
The vendor of Sentry, Sentry Data Systems Holdings, LLC, is
currently owned by ABRY Partners VII, L.P., ABRY Partners VIII,
L.P. and other affiliated funds (who together have an economic
interest of approximately 88.8%), with the remaining ownership
interests held by Sentry management / Sentry management related
vehicles and individual shareholders (who together have an economic
interest of approximately 11.2%). Sentry is headquartered in
Deerfield Beach, Florida, but has a presence across the US working
with greater than 10,000 hospitals, clinics and contract pharmacies
of which a high proportion are unique healthcare providers that
would be new to Craneware.
In evaluating acquisition opportunities the Board implements a
strong valuation discipline. This is underpinned by four key
acquisition criteria of which target companies must fit into at
least one, being:
-- the addition of data sets;
-- the extension of the customer base;
-- the expansion of expertise; and/or
-- the addition of applications.
In the Board's view, Sentry fits all of these criteria. Sentry
is a profitable business with a recurring revenue model, the
acquisition of which the Board believes would materially enhance
the existing Craneware business.
Addition of data sets
Sentry's solutions have enabled it to collect over 140 million
unique longitudinal patient records, providing Sentry with a
comprehensive platform of patient data and intelligence, which
Craneware believes will provide significant revenue opportunities
with multiple healthcare stakeholders (including hospitals and the
associated retail and contract speciality pharmacies within their
communities) as the US healthcare market continues to move towards
value-based healthcare.
Extension of the customer base
Sentry has a customer base of more than 10,000 hospitals,
pharmacies and clinics. This customer base includes over 600 US
hospitals, of which only approximately 35% overlap as existing
Craneware customers. Sentry's extensive network of relationships
with pharmacies and clinics provides an opportunity for Craneware
to reach customers with whom the Group is not currently
engaged.
Expansion of expertise
Pharmacy is the largest cost area for US hospitals outside the
workforce. As a result, there is bipartisan support to reduce the
cost of pharmacy where possible. The Acquisition will enhance
Craneware's focus on and expertise in pharmacy operations within
healthcare providers, whilst also extending the reach of the
Pharmacy Chargelink product family with the retail and contract
speciality pharmacies data for those providers and their
communities.
New applications
The Acquisition adds additional cloud-based applications to
Craneware's product offering. These will sit alongside the Group's
existing Trisus(R) Platform, broadening the depth of engagement
with the Group's customers, whilst also providing another
onboarding point to Craneware platform.
Financial rationale
The Acquisition is expected to be double-digit per cent.
accretive to Craneware's underlying adjusted EPS in the financial
year ending 30 June 2022 before any potential synergy benefits.
Sentry generates 95% of its revenue from software products that
deliver gross margins of more than 83% and achieve an EBITDA margin
of 25%. In addition, 96% of Sentry's revenue is from subscription
and recurring sources.
For its financial years ending 31 December 2020, 2019 and 2018,
Sentry generated revenue of $92 million, $89 million and $89
million, adjusted EBITDA of $23 million, $23 million and $20
million and a loss before tax of $4.2 million, $7.6 million and
$9.1 million respectively (all figures reported under US GAAP and
unaudited). The losses before tax recorded in these three financial
years were driven by significant interest payments as a result of
the relatively high levels of debt within the Sentry business and
significant non-cash goodwill and intangible amortisation charges
accounted for under US GAAP. As at 31 December 2020, Sentry had
gross assets of $251.9 million (unaudited).
Craneware believes that there are clear cross-selling and
operational leverage opportunities deriving from the Acquisition
going forwards.
Details of the Acquisition
Craneware has agreed to acquire Sentry (on a cash free / debt
free basis) for an aggregate consideration of $400m, with the
consideration also subject to adjustment as against a benchmark
level of working capital, all as calculated and agreed or
determined in accordance with the terms of the agreement relating
to the Acquisition.
The Acquisition, which is subject to anti-trust clearance in the
United States and certain other customary conditions, is expected
to complete in early calendar Q3 2021 after the expiration of or
termination of all applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and
satisfaction of the other conditions. In the event that completion
of the Acquisition has not occurred by 5 September 2021 (i.e.
within 90 days of the date of the agreement relating to the
Acquisition) , or such other date as the parties may mutually agree
in writing, either party may terminate the agreement, in which case
the Acquisition will not proceed.
The consideration for the Acquisition is being satisfied as to
$312.5m (as adjusted) in cash and as to $87.5m by the issuance of
the Consideration Shares to Sentry Data Systems Holdings, LLC, the
vendor of Sentry. The Consideration Shares are then expected to be
promptly distributed by the vendor to the underlying equity holders
in the vendor. The equity in the vendor is currently owned by
certain ABRY Partners funds (ABRY Partners VII, L.P., ABRY Partners
VIII, L.P., ABRY Partners VII Co-Investment Fund, L.P., ABRY
Partners VIII Co-Investment Fund, L.P., and ABRY Investment
Partnership, L.P.) who together are expected to receive
approximately 88.8% of the sale proceeds, with the remainder held
by Sentry management / Sentry management related vehicles and
individual shareholders (T&S Lion Holdings LLC, John Randazzo,
Brian Ramsey, Adriana Kovalovska, Lidia A. Rodriguez Hupp
Trust-Series A and Daniel Swem) who together are expected to
receive approximately 11.2% of the sale proceeds. The Consideration
Shares will be subject to 6 month hard lock-up and subsequent 6
month orderly market arrangements in respect of the underlying
equity holders in the vendor who are private equity funds and to 12
month hard lock-up and subsequent 12 month orderly market
arrangements in respect of the underlying equity holders in the
vendor who are members of Sentry management or connected therewith
(in each case subject to customary exceptions).
The cash consideration will be funded from the Group's existing
cash resources, a new $140m debt facility and the net proceeds of
the Placing. The new debt facility comprises a term and revolving
facilities agreement between the Company (as borrower), Silicon
Valley Bank (as mandated lead arranger), Silicon Valley Bank (as
agent) and Silicon Valley Bank (as security trustee). Craneware's
pro forma LTM net leverage is, as at 30 June 2021, expected to be
in the range of 1.3x to 2x.
The cash proceeds will be paid and the Consideration Shares
(which will be subject to customary lock-up arrangements) will be
admitted to trading on AIM and allotted to the vendor of Sentry
upon completion of the Acquisition, which is anticipated by early
calendar Q3 2021.
IMPORTANT NOTICES
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
CONSTITUTE OR FORM ANY PART OF AN OFFER TO SELL OR ISSUE, OR A
SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE
ACQUIRE, ANY SECURITIES IN THE UNITED STATES (INCLUDING ITS
TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE
DISTRICT OF COLUMBIA (COLLECTIVELY, THE "UNITED STATES")),
AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY
CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF SUCH
JURISDICTIONS. NO PUBLIC OFFERING OF SECURITIES IS BEING MADE IN
ANY JURISDICTION.
This Announcement is not for public release, publication,
distribution or forwarding, in whole or in part, directly or
indirectly, in or into the United States, Australia, Canada, the
Republic of South Africa, Japan or any other jurisdiction in which
such release, publication, distribution or forwarding would be
unlawful.
Any securities referred to herein have not been and will not be
registered under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), or under the securities laws of any state or
other jurisdiction of the United States, and may not be offered or
sold, directly or indirectly, in or into the United States except
pursuant to an applicable exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and
in compliance with any applicable securities laws of any state or
other jurisdiction of the United States. No public offering of
securities is being made in the United States.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
ACQQDLFBFQLLBBF
(END) Dow Jones Newswires
June 07, 2021 12:25 ET (16:25 GMT)
Grafico Azioni Craneware (LSE:CRW)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Craneware (LSE:CRW)
Storico
Da Lug 2023 a Lug 2024