GS Acquisition Holdings Corporation
PROPOSED BUSINESS COMBINATION: Vertiv Holdings LLC
ESTIMATED CURRENT FUNDS in TRUST: $707.9 million*
CURRENT PER SHARE REDEMPTION PRICE: $10.26*
ENTERPRISE VALUE: $5.3 billion
*SPACInsider estimate a/o 2-2-20
GS Acquisition Holdings Corp. proposes to merge with Vertiv Holdings LLC, a Platinum Equity portfolio company, and a global provider of critical digital infrastructure and continuity solutions. David Cote, CEO of GSAH, will serve as Executive Chairman of Vertiv, and Vertiv’s existing management team will continue to be led by 30-year industry veteran CEO Rob Johnson.
The transaction is expected to close in the first quarter of 2020, and at close Vertiv’s stock will trade under the ticker symbol NYSE: VRT. Additionally, Vertiv will have an anticipated pro forma enterprise value of approximately $5.3 billion, or 8.9x the company’s estimated 2020 pro forma Adjusted EBITDA of approximately $595 million.
Vertiv delivers the hardware, software, analytics and ongoing services customers rely on to enable their vital applications to run continuously, perform optimally and grow with their business needs. The company’s portfolio of power, thermal and IT management along with cooling and IT infrastructure solutions and services that extend from the cloud to the edge of the network, generated nearly $4.3 billion in revenue in 2018.
Transaction Summary
After giving effect to any redemptions, the balance of the approximately $705 million in cash held in GSAH’s trust account, together with $1.239 billion in private placement proceeds, will be used to pay $415 million cash consideration (subject to certain adjustments) to Vertiv stockholders, pay transaction expenses and reduce Vertiv’s existing indebtedness to up to 3.6x 2019 estimated pro forma Adjusted EBITDA.
- The aggregate merger consideration is expected to be approximately $5.095 billion, which amount will be:
- (1) increased by the amount of cash held by Vertiv Holdings and its subsidiaries as of the closing of the Business Combination;
- (2) decreased by the amount of Vertiv Holdings’ outstanding indebtedness as of 12:01 a.m., local time in each applicable jurisdiction, on the date of the closing of the Business Combination;
- (3) decreased by the aggregate amount of certain transaction expenses incurred by Vertiv Holdings or its subsidiaries to the extent unpaid as of the date of the closing of the Business Combination; and
- (4) decreased by the amount equal to the lesser of:
- (a) an amount equal to 50% of the cost of any representation and warranty insurance policy bound and issued in connection with the Business Combination and
- (b) $2.5 million.
PIPE
- 123,900,000 shares of Class A common stock at $10.00 for an aggregate purchase price equal to $1,239,000,000
- The Sponsor Related PIPE Investors are expected to fund $230 million of the PIPE Investment, for which they will receive 23 million shares of Class A common stock
- GS PIPE Investors have subscribed for $210 million in the PIPE Investment and a limited liability company wholly-owned by David M. Cote has subscribed for an additional $20 million in the PIPE Investment.
- GS PIPE Investors intend to make a portion of their subscription available to certain employees of Goldman Sachs and associates of David Cote prior to the PIPE Investment.
- Separately, Goldman Sachs & Co. LLC has agreed to a forward-starting swap agreement relating to $110 million of shares of GSAH with an institutional investor. As a result of the foregoing, the GS PIPE Investors may not have an economic interest in the PIPE Investment equal to their subscription.
Notable Conditions to Closing
- Minimum Required Funds Condition: after redemptions and paying the deferred underwriting discount, together with the proceeds from the PIPE Investment, shall equal or exceed $1.375 billion
- Based on the amount of $705.0 million in trust as of September 30, 2019, including accrued dividends, and taking into account the anticipated gross proceeds of approximately $1,239.0 million from the PIPE Investment, approximately 55,400,000 shares of Class A common stock may be redeemed and still enable GSAH to have sufficient cash to satisfy the cash closing conditions in the Merger Agreement (or $566,188,000 using a redemption price of $10.22)
Notable Conditions to Termination
- By either Parent or the Seller if the Transactions shall not have been consummated by April 15, 2020 (the “Outside Date”)
Founder Shares and Private Placement Warrants
- 17,250,000 Founder Shares at IPO and 10,533,333 Private Placement Warrants purchased at $1.50
- None to be forfeited and cancelled at combination close
ADVISORS
- Goldman Sachs & Co. LLC acted as lead placement agent and exclusive financial advisor to GSAH.
- J.P. Morgan Securities LLC and Deutsche Bank Securities acted as capital markets advisors to GS Acquisition Holdings Corp.
- J.P. Morgan Securities LLC acted as financial advisor to Vertiv.
- Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to GSAH.
- Morgan, Lewis & Bockius, LLP and Gibson, Dunn & Crutcher LLP acted as joint legal advisors to Platinum Equity and Vertiv.
GS ACQUISITION HOLDINGS CORP. MANAGEMENT & BOARD
Executive Officers
David M. Cote, 65
CEO, President, Secretary and Chairman of the Board
Mr. Cote served as Chairman and Chief Executive Officer of Honeywell from July 2002 to March 2017. Most recently, Mr. Cote was non-Executive Chairman of the Board at Honeywell until April 23, 2018. He joined Honeywell as President and Chief Executive Officer in February 2002. Prior to joining Honeywell, he served as Chairman, President and Chief Executive Officer of TRW Inc., a provider of products and services for the aerospace, information systems and automotive markets, from August 2001 to February 2002. From February 2001 to July 2001, he served as TRW’s President and Chief Executive Officer and from November 1999 to January 2001 he served as its President and Chief Operating Officer. Mr. Cote was Senior Vice President of General Electric Company and President and Chief Executive Officer of GE Appliances from June 1996 to November 1999. Mr. Cote was a director of the Federal Reserve Bank of New York from March 2014 to March 2018. He previously served as a director of JPMorgan Chase & Co. from July 2007 to July 2013.
Board of Directors
Raanan A. Agus, 50
Director
Mr. Agus joined Goldman Sachs in 1993 and served as a member of the Equities Arbitrage Department and Goldman Sachs Principal Strategies, running this latter group from 2004 through 2007. Since January 2008, he has co-headed the Goldman Sachs Investment Partners platform, which includes a global long/short hedge fund and direct private equity investing business. In addition, Mr. Agus oversees other direct alternative investing businesses within GSAM, including a credit alternatives platform, with a large middle market lending business, a renewable power investing business and a real estate investing business. Mr. Agus serves on the Investment Management Division Executive Committee. He was promoted to Managing Director in 1999 and Participating Managing Director in 2000. Mr. Agus earned an A.B. in economics from Princeton University, summa cum laude, Phi Beta Kappa in 1989 and a JD/MBA from Columbia University as a Stone Scholar and Beta Gamma Sigma member in 1993.
James Albaugh, 68
Director Nominee
Mr. Albaugh was President and Chief Executive Officer of The Boeing Company’s (“Boeing”) Commercial Airplanes business unit from September 2009 through October 2012. Prior to holding that position, Mr. Albaugh was President and Chief Executive Officer of Boeing’s Integrated Defense Systems business unit from July 2002 to September 2009. He joined Boeing in 1975 and held various other executive positions prior to July 2002, including President and Chief Executive of Space and Communications and President of Space Transportation. Mr. Albaugh was a member of Boeing’s Executive Council from 1998 through 2012. In addition, Mr. Albaugh was an advisor to Perella Weinberg Partners, a global advisory and asset management firm, from September 2016 until April 30, 2018, and has been an advisor to Industrial Development Funding, an asset management firm, since May 1, 2018. Previously, Mr. Albaugh was a senior advisor to The Blackstone Group L.P. from December 2012 until July 2016. Mr. Albaugh currently serves as a director of American Airlines Group Inc. (Nasdaq: AAL), Harris Corporation (NYSE: HRS) and Arconic Inc. (NYSE: ARNC). Mr. Albaugh served as a director of B/E Aerospace, Inc. from 2014 until its acquisition by Rockwell Collins, Inc. in April 2017, and as a director of TRW Automotive Holdings Corp. from 2006 until its acquisition by ZF Friedrichshafen AG in 2015.
Roger Fradin, 64
Director Nominee
Mr. Fradin joined Honeywell in 2000 when Honeywell acquired Pittway Corporation. Mr. Fradin served as president and chief executive officer of Honeywell’s Automation and Control Solutions business from January 2004 to April 2014. Mr. Fradin served as vice chairman of Honeywell from April 2014 until his retirement in February 2017, and has served as an independent contractor to Honeywell since March 2018. Mr. Fradin is also an operating executive with The Carlyle Group and an advisor to Seal Rock Partners. Mr. Fradin received his M.B.A. and B.S. degrees from The Wharton School at the University of Pennsylvania, where he has also served as a member of the faculty. Mr. Fradin is currently a Director at MSC Industrial Direct Co., Inc. (Nasdaq: MSM), Pitney Bowes Inc. (NYSE: PBI), Harris Corporation (NYSE: HRS) and Signode Industrial Group.
Steven Reinemund, 70
Director Nominee
Mr. Reinemund has served as Executive in Residence at Wake Forest University School of Business since June 2014. Mr. Reinemund previously served as Dean of Business at Wake Forest University from July 2008 until June 2014, an organization he joined after a 23-year career with PepsiCo, Inc. (“PepsiCo”). At PepsiCo Mr. Reinemund served as executive chairman from October 2006 to May 2007, and as chairman and CEO from May 2001 to October 2006. Prior to being CEO, he was PepsiCo’s president and chief operating officer from September 1999 to May 2001. Mr. Reinemund began his career with PepsiCo in 1984 at Pizza Hut, Inc. and held other positions until he became president and CEO of Frito-Lay’s North American snack division in 1992. He became chairman and CEO of Frito-Lay’s worldwide operations in 1996. Mr. Reinemund was a director of Johnson & Johnson from 2003 to 2008 and of American Express Company from 2007-2015. Mr. Reinemund currently serves as a director of Exxon Mobil Corporation (NYSE: XOM), Marriott International, Inc. (Nasaq: MAR), Walmart Inc. (NYSE: WMT) and Chick-fil-A, Inc. He also serves on the Board of Trustees at Wake Forest University, the Board of Directors at USNA Foundation, and the Board of Governors at the Center for Creative Leadership. A graduate of the United States Naval Academy in 1970, Mr. Reinemund served five years as an officer in the United States Marine Corps, achieving the rank of Captain. He received an MBA from the University of Virginia, and has been awarded honorary doctorate degrees by Johnson and Wales University and Bryant University.