ESTIMATED CURRENT FUNDS in TRUST: $200.8 million*
CURRENT PER SHARE REDEMPTION PRICE: $10.40*
IMPLIED ENTERPRISE VALUE: $757 million
*SPACInsider estimate a/o 7-12-20
PROPOSED BUSINESS COMBINATION: DIGITAL MEDIA SOLUTIONS
Leo Holdings Corp. (LHC), proposes to combine with Digital Media Solutions Holdings, LLC (“DMS”). The Business Combination will introduce DMS to the equity capital markets as a publicly listed company with a total enterprise value of $757 million or 13.2x the Company’s fiscal year 2020 expected Adjusted EBITDA of $57 million and 10.0x the Company’s fiscal year 2021 expected Adjusted EBITDA of $75 million.
Digital Media Solutions is a martech-enabled business capitalizing on the secular shift of advertising dollars from traditional offline channels to online digital channels. Essentially, DMS leverages proprietary technology solutions, proprietary media distribution and data-driven processes to help large brands acquire their customers. This helps clients de-risk marketing spend across digital channels through DMS’s pay-for-performance model, meaning DMS is paid to deliver customers rather than impressions across a variety of end markets including but not limited to insurance, education, health & wellness, consumer finance and home services.
Per the press release, Digital Media Solutions’ performance across their portfolio of verticals can be characterized in one of three ways:
- A significant portion of their revenue comes from verticals that are in the early stages of transition to digital and therefore continuing on an elevated growth trajectory like Insurance, Health & Wellness and Direct-to-Consumer products.
- Some verticals such as Education are counter-cyclical, with limited impact to client activity.
- Certain marketplace solutions have been impacted, particularly in Consumer Finance given the reduction in demand for credit card, lending and other personal banking services. Consumer Finance represented only approximately 11% of total revenue last year, and DMS is optimistic that banks will increase marketing spend as consumer demand returns following COVID-related disruption. “We are nonetheless being disciplined on the cost side, and have multiple levers to align expenses with any changes in revenue.”
- Immediately prior to the closing of the Business Combination, Leo will domesticate as a Delaware corporation and additional investors will purchase $100 million of Class A common stock of Leo in a private placement at $10.00 per share.
- In addition, cash held in Leo’s trust account, net of redemptions, and the gross proceeds of the private placement must be no less than $200 million, and such cash will be used:
- To pay $30 million to DMS to be held on its balance sheet,
- To pay down $10 million of DMS’s current credit facility,
- To pay the parties’ transaction costs and
- To pay the cash portion of the consideration payable to the current DMS equity holders.
Upon closing, the Board will be chaired by Mary Minnick, formerly the Global President of Marketing, Strategy and Innovation at The Coca-Cola Co. Ms. Minnick currently serves on the boards of the Target Corporation, Glanbia, plc and Leo.
In addition, the remaining Board members will include Robbie Isenberg (Managing Director, Clairvest Group), Lyndon Lea (Chairman & CEO, Leo), Robert Darwent (CFO, Leo), James Miller (General Counsel and Corporate Secretary, Clairvest Group), Joe Marinucci (CEO, DMS) and Fernando Borghese (COO, DMS).
The business combination is expected to close before July 31, 2020, LHC’s combination deadline.
- Additional investors will purchase $100 million of Class A common stock of Leo in a private placement at $10.00 per share.
NOTABLE CONDITIONS TO CLOSING
- Cash held in Leo’s trust account, net of redemptions, and the gross proceeds of the private placement must be no less than $200 million
NOTABLE CONDITIONS TO TERMINATION
- By Prism, Clairvest or Leo, if the Closing has not occurred by July 31, 2020 (the “Outside Date”)
SPONSOR SHARES & WARRANTS
Sponsor holdings at IPO = 5,000,000 Class B founder shares and 4,000,000 private placement warrants purchased at $1.50.
- Leo Sponsor will surrender to Leo 2,000,000 private placement warrants (the “Surrendered Warrants”)
- And, together with certain other holders, an aggregate of 1,500,000 Class B ordinary shares of Leo (collectively, the “Surrender”)
On June 22, 2020, the Surrender Agreement was amended and restated (Link to Ex. 10.1 of the 8-K):
- (a) the Sponsor shall automatically irrevocably surrender and forfeit to the Company for no consideration, as a contribution to capital, 1,473,000 Class B Shares (as defined below) (“Sponsor Class B Shares”) and 2,000,000 warrants to purchase Class A ordinary shares of the Company (the “Forfeited Warrants”);
- (b) the Sponsor shall automatically irrevocably surrender and forfeit to the Company for no consideration, as a contribution to capital, an additional number of Class B Shares equal to
- (i)(A) the quotient of the Aggregate Lion Subscription Amount (as defined below) divided by (B) the Closing Date Market Capitalization multiplied by
- (ii) 3,437,000 (such number of Class B Shares the “Additional Sponsor Class B Shares”). “Closing Date Market Capitalization” as used in the foregoing means an amount equal to (1) the total number of issued and outstanding shares of Surviving Company Class A Common Stock on the date of the Closing multiplied by (2) the opening price per share of Surviving Company Class A Common Stock on the date of the Closing. “Aggregate Lion Subscription Amount” as used in the foregoing means an amount equal to the sum of the “Aggregate Subscription Amount” as set forth in (x) the Subscription Agreement, dated as of January 31, 2020, by and between the Company and Lion Capital (Guernsey) Bridgeco Limited, as may be amended and (y) the Subscription Agreement, dated as of February 5, 2020, by and between the Company and Lion Capital (Guernsey) Bridgeco Limited, as may be amended.
- (c) Bush shall automatically irrevocably surrender and forfeit to the Company for no consideration, as a contribution to capital, 9,000 Class B Shares (“Bush Class B Shares”);
- (d) Bensoussan shall automatically irrevocably surrender and forfeit to the Company for no consideration, as a contribution to capital, 9,000 Class B Shares (“Bensoussan Class B Shares”);
- (e) Minnick shall automatically irrevocably surrender and forfeit to the Company for no consideration, as a contribution to capital, 9,000 Class B Shares (“Minnick Class B Shares” and together with the Sponsor Class B Shares, Additional Sponsor Class B Shares, the Bush Class B Shares and the Bensoussan Class B Shares, the “Forfeited Securities”); and
- (f) the Forfeited Securities and the Forfeited Warrants shall be automatically and immediately cancelled.
- Upon closing, the Board will be chaired by Mary Minnick, formerly the Global President of Marketing, Strategy and Innovation at The Coca-Cola Co. Ms. Minnick currently serves on the boards of the Target Corporation, Glanbia, plc and Leo.
- In addition, the remaining Board members will include:
- Robbie Isenberg (Managing Director, Clairvest Group)
- Lyndon Lea (Chairman & CEO, Leo)
- Robert Darwent (CFO, Leo)
- James Miller (General Counsel and Corporate Secretary, Clairvest Group)
- Joe Marinucci (CEO, DMS)
- Fernando Borghese (COO, DMS).
- Citigroup Global Markets Inc. acted as financial advisor, capital markets advisor and private placement agent to Leo.
- Kirkland & Ellis LLP acted as legal counsel to Leo.
- Skadden, Arps, Slate, Meagher & Flom LLP acted as legal counsel to DMS.
LEO HOLDINGS CORP. MANAGEMENT & BOARD
Lyndon Lea, 48
Chairman and CEO
Mr. Lea, is a founder of Lion Capital and serves as its Managing Partner since its inception in 2004. Prior to founding Lion Capital, Mr. Lea was a partner of Hicks, Muse, Tate & Furst where he co-founded its European operations in 1998. From 1994 to 1998, Mr. Lea served at Glenisla, the former European affiliate of Kohlberg Kravis Roberts & Co., prior to which he was an investment banker at Schroders in London and Goldman Sachs in New York. Mr. Lea graduated with a BA in Honors Business Administration from the University of Western Ontario in Canada in 1990.Mr. Lea has been active in the investment arena for 28 years, 24 of which have been exclusively focused on private equity.
Mr. Lea has led the acquisitions of over 25 investments, including notable brands such as Weetabix, Jimmy Choo, Orangina, Kettle Foods, wagamama, Picard and Authentic Brands Group, amongst many others. Mr. Lea is currently Chairman of the contemporary fashion brand AllSaints where he served as Executive Chairman for the first 18 months of the investment, from May 2011 to October 2012. Under Mr. Lea’s guidance, AllSaints has seen a 53% increase in revenue. Mr. Lea is also a director of menswear brand, John Varvatos; premium skincare company, Perricone MD; accessible jewelry company, Alex & Ani; luxury sneaker brand, Buscemi; and premium apparel brand, Paige.
Mr. Lea previously led investments in, and sat on the board of, UK cereal company Weetabix; French food manufacturer Materne; restaurant chain wagamama; global, luxury shoe company, Jimmy Choo; private label razor business, Personna; soft drinks business, Orangina; snack business, Kettle Foods; Finnish bakery company, Vaasan; European frozen food brand, Findus; Dutch foodservice company, Ad Van Geloven; global hair accessories brand ghd; French frozen retailer, Picard; global brand development, marketing and entertainment company, Authentic Brands Group; UK food company, Premier Foods (LON:PFD); UK biscuit business, Burton’s Foods; UK furniture company, Christie-Tyler; leading European automotive valuation guide, EurotaxGlass’s; Polish cable company, Aster City; champagne houses G.H. Mumm and Champagne-Perrier Jouët; directories group, Yell; and clothing company, American Apparel. Mr. Lea also previously sat on the board of Aber, a diamond mining company which owned the luxury jewelry brand Harry Winston.
Robert Darwent, 45
CFO and Director
Mr. Darwent is a founder of Lion Capital where he sits on the Investment Committee and Operating Committee of the firm. Prior to founding Lion Capital in 2004, Mr. Darwent worked with Mr. Lea in the European operations of Hicks, Muse, Tate & Furst since its formation in 1998. From 1995 to 1998, Mr. Darwent worked in the London office of Morgan Stanley in their investment banking and private equity groups. Mr. Darwent graduated from Cambridge University in 1995.
Mr. Darwent is currently a director of the following companies: Authentic Brands Group, the global brand licensing company; Blow Ltd, the online beauty services provider; HEMA, the European retailer; Lenny & Larry’s, the US protein-enhanced cookie brand; Loungers, the UK bar and restaurant chain; Spence Diamonds, a North American diamond jewelry retailer; and Young’s Seafood, the UK chilled and frozen food manufacturer. Previously, Mr. Darwent has sat on the board of the following companies: AS Adventure, the leading European outdoor specialist retailer; Burton’s Foods, the UK biscuit business; Christie-Tyler, the UK furniture manufacturer; ghd, the global hair appliances business; Jimmy Choo, the luxury shoe and accessories brand; La Senza, the UK lingerie retailer; G.H. Mumm and Champagne Perrier-Jouët, the champagne houses; wagamama, the restaurant chain; and Weetabix, the cereal company.
Board of Directors
Robert Bensoussan, 59
Mr. Bensoussan is the former Chief Executive Officer of Jimmy Choo, where he served from 2001 to 2011, and the former Chairman and Chief Executive Officer of LK Bennett, where he served from 2008 to 2016. Since 2008, Mr. Bensoussan has been a director and the majority owner of Sirius Equity LLP, a UK company that invests in retail and brands based in the UK and Europe. In the past four years, Mr. Bensoussan has invested in UK shoe and clothing retailer LK Bennett and feelunique.com, one of Europe’s largest online beauty retailers. Mr. Bensoussan is also on the board of lululemon athletica Inc. (NASDAQ:LULU) and of Inter Parfums Inc. (NASDAQ:IPAR). Mr. Bensoussan is also a member of four private boards, including French retail conglomerate The Vivarte Group, Zen Cars, a Belgian electric car rental company, Eaglemoss, a UK part-works publisher, and he is a member of the Advisory Board of Pictet Bank Premium Brands Fund. Mr. Bensoussan has a degree in business from ESSEC Business School in France, which he received in 1980.
Lori Bush, 61
Ms. Bush is the former President and Chief Executive Officer of Rodan + Fields, a US manufacturer and Social Commerce company specializing in skincare products, where she served from October 2007 until her retirement in January 2016. During her tenure as President and Chief Executive Officer, Ms. Bush helped grow the company from a start-up to one of the largest premium skincare brands in the United States with almost $1 billion annual sales. With more than 25 years’ experience in the consumer and health care products industries, Ms. Bush was responsible for overseeing the brand’s entrance into the direct selling arena. A seasoned direct selling leader, Ms. Bush previously served from February 2000 to March 2006 as President of the personal care segment of Nu Skin Enterprises, Inc. (NYSE:NUS), a $1 billion global direct selling company operating in more than 40 markets around the world. During her tenure with the company, Ms. Bush acted as a global spokesperson for the brand while leading the marketing, operations and research and development functions. Ms. Bush has also held several leadership positions, from 1993 to 2000, within the skincare franchise of Johnson & Johnson Consumer Products Companies, including Worldwide Executive Director Skin Care Ventures and Vice President of Professional Marketing at Neutrogena. Ms. Bush is also a current director of Viveve Medical, Inc. (NASDAQ:VIVE), where she has served since 2016. Ms. Bush has a Bachelor of Science in Medical Technology, which she received from Ohio State University in 1978 and an MBA from Temple University which she received in 1985.
Mary E. Minnick, 58
Ms. Minnick was a Partner of Lion Capital from 2007 until 2017. Previously, Ms. Minnick served in various capacities at The Coca-Cola Company (NYSE:KO), including as Chief Operating Officer of Asia and Global President of Marketing, Strategy and Innovation, from 1983 to 2007. During her tenure at The Coca-Cola Company, Ms. Minnick led the strategic planning process for all markets and held direct responsibility for strategic planning, marketing, new product development, product quality, advertising, media, environmental policies, sustainability, research and development, science and regulatory affairs, worldwide packaging and equipment. In her role as Chief Operating Officer of Asia from 2002 to 2005, Ms. Minnick was responsible for the management of 30 countries throughout Asia, over $6 billion in revenue and approximately $2 billion in net income. Ms. Minnick is a member of the board of directors of the Target Corporation (NYSE:TGT), which she joined in 2005. Ms. Minnick has also served as a member of the board of directors of the global brewer Heineken (AMS:HEIA) from 2008 to 2015 and the consumer packaged food and beverage company WhiteWave Foods Co. (NYSE:WWAV) from 2012 to 2016. Ms. Minnick has an MBA from Duke University and a BA in Business from Bowling Green State University.