Converge Technology shareholders back C$1.3bn takeover by H.I.G. Capital amid surging stock gains

What Does the Acquisition of Converge Technology Solutions by H.I.G. Capital Mean for the IT Industry?

Converge Technology Solutions Corp. has received overwhelming shareholder approval for its acquisition by an affiliate of H.I.G. Capital, marking a major development in the North American IT services sector. Approved by 98.85% of shareholders present or represented by proxy at the April 10, 2025, special meeting, the transaction is structured as a statutory plan of arrangement under the Canada Business Corporations Act. Once completed, this deal will transition Converge from a publicly traded company to a private entity, creating a new powerhouse in the IT infrastructure and cloud services industry.

The cash acquisition, worth approximately C$1.3 billion, includes a revised offer of C$6.00 per common share—an increase from the initial C$5.50 following a competing proposal. This revision demonstrates the confidence H.I.G. Capital places in Converge’s strategic value and long-term potential in cloud architecture, cybersecurity, and advanced analytics. Converge’s board unanimously recommended the enhanced offer, which delivers a meaningful premium to shareholders.

The approval sets the stage for the final court order, which Converge expects to receive from the Ontario Superior Court of Justice (Commercial List) on April 16, 2025. Subject to regulatory and customary closing conditions, the transaction is slated to close on or around April 22, 2025.

How Will the Merger with Mainline Information Systems Shape the Future?

The acquisition is not just a buyout—it also signals a strategic integration with Mainline Information Systems, another H.I.G. Capital portfolio company based in Florida. By combining operations, Converge and Mainline will form a larger platform with an anticipated revenue run rate of nearly US$3 billion in 2025, according to industry estimates. The merged entity is expected to serve clients across North America with a broader suite of IT services.

Leadership for the combined company has been announced: Greg Berard, CEO of Converge, will become Chief Executive Officer, while Jeff Dobbelaere, President and CEO of Mainline, will serve as President. This structure reflects a dual vision that seeks to integrate Converge’s multi-cloud and managed services capabilities with Mainline’s focus on enterprise server infrastructure and cybersecurity.

Together, the companies plan to pursue operational synergies while scaling managed services, AI-powered solutions, and enterprise data platforms. Industry analysts suggest that such a merger could establish a formidable mid-market competitor to top-tier systems integrators, including Accenture and IBM Global Services.

What Strategic Benefits Will the Deal Bring to Stakeholders?

The acquisition offers shareholders near-term liquidity and a 35% premium to the pre-offer trading price, underscoring the value H.I.G. Capital sees in Converge’s platform. The transaction also provides investors with a definitive exit opportunity at a price that reflects the company’s growth potential and market positioning.

For enterprise clients, the merger is expected to yield a more robust catalogue of services. With enhanced capabilities in hybrid cloud deployment, AI-driven analytics, digital workplace solutions, and data center transformation, the combined firm will be better equipped to manage end-to-end digital transformation projects.

Employees are also likely to benefit from broader roles, cross-border mobility, and access to a deeper resource pool as the company scales its delivery model. The alignment with Mainline and H.I.G. is expected to bring stronger investment into research, development, and automation, enabling the firm to stay competitive in a fast-changing technology environment.

How Does the Deal Reflect Larger Industry Trends in IT Services?

The Converge-H.I.G. Capital transaction underscores a broader consolidation trend in the IT services industry. Faced with increased client demand for integrated digital solutions, many firms are seeking scale and diversification through mergers. The race for capabilities in artificial intelligence, machine learning, cybersecurity, and hybrid cloud has made acquisitions an attractive strategy.

Private equity firms like H.I.G. Capital have been particularly active in this space, deploying capital into digital-first companies with scalable business models. Converge fits this mold, with a diversified client base and a proven acquisition-led growth model, having completed over 30 transactions since 2017.

As managed services providers consolidate to offer bundled services, this transaction signals that mid-market firms are not just surviving—they are gaining the financial muscle to compete with incumbents. By merging with Mainline, Converge is positioning itself as a credible full-service alternative in an industry where clients increasingly prefer fewer vendors and more integrated solutions.

What Are the Key Financial and Legal Milestones to Watch?

A total of 131.3 million votes were cast in favor of the acquisition, representing roughly 70% of all outstanding shares. Importantly, 98.71% of minority shareholders—excluding Rollover Shareholders who agreed to retain equity in the private entity—also voted in favor. These figures underscore strong investor confidence in the transaction’s fairness and prospects.

Shareholders will receive C$6.00 per common share in cash, except for those participating in the equity rollover. The payout will follow Converge’s receipt of a final court order, expected on April 16, 2025. The company will subsequently be delisted from the TSX and will cease reporting under Canadian securities laws.

Registered shareholders are required to submit a Letter of Transmittal and surrender their share certificates or DRS statements to receive payment. Instructions and forms have been made available on SEDAR+ under the company’s profile.

What Does the Stock Market Say About Converge’s Valuation and Prospects?

As of April 10, 2025, Converge Technology Solutions (TSX: CTS) closed at C$5.98, just below the C$6.00 buyout offer. The stock has surged more than 80% year-to-date, rebounding strongly from its 52-week low of C$2.90. On the U.S. OTCQX market, it traded around US$4.28, reflecting strong investor anticipation of the acquisition’s closure.

Market sentiment remains generally bullish but has plateaued, given the proximity of the trading price to the buyout level. Analysts have set a 12-month average target of C$5.81, indicating minimal upside from current levels and suggesting that most of the acquisition-related optimism has already been priced in.

From a fundamental perspective, Converge’s earnings have declined annually at an average rate of 62.7%, which contrasts sharply with the sector average growth rate of 3.7%. As a result, some analysts view the acquisition premium as generous and timely, providing a valuable exit for shareholders amid operational volatility.

Buy-Sell-Hold Verdict:

Given the narrow spread between the current market price and the offer price, the stock is now best viewed as a hold for existing investors awaiting payout. For prospective buyers, the minimal arbitrage opportunity does not justify new entry. Long-term investors should monitor the post-acquisition integration closely to assess future opportunities if the combined entity eventually seeks a public listing again.

What’s Next for Converge Technology Solutions?

The merger with Mainline Information Systems and the transition to private ownership under H.I.G. Capital’s stewardship mark a turning point for Converge Technology Solutions. The company’s growth model, rooted in acquisition and rapid service diversification, will now evolve under the guidance of a well-capitalized private equity sponsor.

With an experienced leadership team, complementary business portfolios, and enhanced operational synergies, the new combined entity is expected to become a formidable presence in the global IT solutions market. As the industry continues to shift toward platform-based service delivery and AI-enabled automation, Converge and Mainline appear well-positioned to capitalize on this transformation.