H.I.G. Capital to acquire Converge Technology Solutions in C$1.3bn all-cash deal

Converge Technology Solutions Corp. is set to embark on a transformative new chapter after entering into a definitive agreement to be acquired by H.I.G. Capital in an all-cash transaction valued at approximately C$1.3 billion. Announced on February 7, 2025, the acquisition will see shareholders of Converge Technology Solutions receive C$5.50 per common share, reflecting a premium of approximately 56% over the company’s last closing price and 57% over its 30-day volume-weighted average price on the Toronto Stock Exchange (TSX).

This acquisition is poised to reshape the future of Converge Technology Solutions, positioning it alongside Mainline Information Systems, LLC, an H.I.G. Capital-owned IT solutions provider. The transaction is designed to accelerate Converge’s strategic growth strategy, expand its service offerings, and deliver enhanced value to both shareholders and customers.

A Strategic Acquisition to Drive Growth

Under the terms of the arrangement agreement, H.I.G. Capital will acquire all outstanding common shares of Converge Technology Solutions, excluding those held by shareholders participating in rollover equity agreements. The deal values Converge at an enterprise value of approximately C$1.3 billion, marking a significant milestone for the company.

The acquisition is not just about financial gains—it is a strategic growth strategy aimed at combining the complementary strengths of Converge Technology Solutions and Mainline Information Systems. Both companies specialise in delivering advanced IT solutions, including cybersecurity, hybrid cloud infrastructure, digital transformation, and managed services. This merger is expected to create a powerhouse in the IT services sector, capable of addressing the evolving needs of enterprises across industries.

Aaron Tolson, Managing Director at H.I.G. Capital, emphasised Converge’s alignment with future technology trends and its reputation as a trusted advisor to clients. According to Tolson, the combination with Mainline will offer differentiated capabilities in data centre infrastructure, networking, security, and hybrid cloud solutions, enabling the new entity to better serve both customers and original equipment manufacturer (OEM) partners.

Leadership Continuity to Steer the Combined Entity

The newly formed company will benefit from strong leadership continuity, with Converge Technology Solutions’ Chief Executive Officer Greg Berard set to assume the role of CEO of the combined business. Meanwhile, Mainline Information Systems’ President and CEO Jeff Dobbelaere will serve as President, reflecting a leadership structure designed to leverage the expertise of both organisations.

Berard expressed enthusiasm about the partnership with H.I.G. Capital, highlighting the opportunity to enhance customer service and drive innovation. He noted that as technology continues to reshape industries globally, the ability to deliver comprehensive, forward-thinking solutions will be critical to helping clients achieve their business objectives.

Dobbelaere echoed similar sentiments, stating that Mainline’s specialisation in hybrid cloud, cybersecurity, and software solutions complements Converge Technology Solutions’ strengths. Together, the companies aim to create new growth opportunities for employees, expand service offerings, and deliver greater value to customers.

What Does the Deal Mean for Shareholders?

For shareholders of Converge Technology Solutions, the deal represents immediate financial benefits. The offer of C$5.50 per share in cash represents a significant premium, underscoring the value that H.I.G. Capital sees in Converge’s business model and growth prospects. Shareholders holding approximately 24% of Converge’s outstanding shares have already entered into voting support agreements, demonstrating strong backing for the transaction.

The acquisition was unanimously approved by Converge’s Board of Directors, with an interested director abstaining from voting. The decision followed the recommendation of a special committee of independent directors, which conducted a comprehensive evaluation process with the assistance of legal and financial advisors. The board concluded that the transaction is in the best interests of the company and its shareholders.

To finalise the acquisition, Converge Technology Solutions will hold a special shareholder meeting in April 2025. The deal requires approval from two-thirds of the votes cast by shareholders, as well as a simple majority excluding votes from rollover shareholders. The transaction is also subject to regulatory approvals and court clearances, with completion expected in the second quarter of 2025.

Financial Performance Strengthens Acquisition Rationale

The timing of the acquisition aligns with Converge Technology Solutions’ strong financial performance. The company is scheduled to release its preliminary fourth-quarter fiscal 2024 results on February 10, 2025, with gross profit and adjusted EBITDA expected to be at the high end of previously provided guidance. Converge anticipates gross profit in the range of $165 million to $178 million and adjusted EBITDA between $36 million and $47 million.

These robust financial results highlight the company’s growth trajectory and underscore why H.I.G. Capital views Converge Technology Solutions as a valuable addition to its portfolio. The acquisition values the company at an enterprise value-to-adjusted EBITDA multiple of approximately 7.4 times, reflecting the market’s confidence in its future earnings potential.

Expert Insights on the Strategic Impact

Industry analysts view the acquisition as a strategic move that will strengthen both companies’ competitive positions in the IT services market. The integration of Converge Technology Solutions with Mainline Information Systems is expected to create a diversified, scalable platform capable of driving innovation in critical areas such as cloud computing, digital infrastructure, and cybersecurity.

Experts suggest that the merger will enable the combined entity to capitalise on emerging technology trends, including the growing demand for hybrid cloud solutions and advanced cybersecurity services. The deal also positions the company to pursue new business opportunities and expand into untapped markets, leveraging H.I.G. Capital’s global investment expertise.

Furthermore, the partnership is expected to create synergies that enhance operational efficiency and foster long-term value creation. By combining resources, talent, and technological capabilities, Converge Technology Solutions and Mainline can offer comprehensive solutions tailored to the complex needs of modern enterprises.

What’s Next for Converge Technology Solutions?

As the acquisition moves toward completion, stakeholders will be closely watching how the combined company executes its strategic growth strategy. The transaction not only provides immediate financial rewards for shareholders but also sets the stage for sustained growth through expanded service offerings and market reach.

Once finalised, Converge Technology Solutions will delist from public markets and cease to be a reporting issuer under Canadian securities laws. This shift will allow the company to focus on long-term strategic initiatives without the pressures of quarterly reporting, enabling greater flexibility in pursuing growth opportunities.

With strong leadership, a robust financial foundation, and the backing of H.I.G. Capital, Converge Technology Solutions is well-positioned to thrive in the rapidly evolving IT landscape. The acquisition marks the beginning of a new era for the company—one defined by innovation, strategic partnerships, and a commitment to delivering value to customers and stakeholders alike.