Shift4 Payments to acquire Givex in strategic C$200m all-cash deal

In a significant move that underscores its aggressive expansion strategy, Shift4 Payments, Inc. has announced an agreement to acquire Givex Corp. in a comprehensive all-cash transaction valued at approximately C$200 million. The deal, set at C$1.50 per share, represents a premium of 64% over Givex’s 20-day volume-weighted average price (VWAP) on the Toronto Stock Exchange (TSX) for the period ending August 23, 2024.

This acquisition marks a pivotal moment for both companies. For Shift4, a leader in commerce-enabling technology, this deal represents a bold step into a broader global market, capitalizing on Givex’s extensive footprint and advanced loyalty and gift card solutions. For Givex shareholders, the transaction offers immediate liquidity and certainty in an environment where long-term business plans can be fraught with risks and uncertainties.

Strategic Importance and Shareholder Value

The transaction, executed through a statutory plan of arrangement under the Business Corporations Act (Ontario), offers several strategic benefits. Most notably, it mitigates the execution risks tied to Givex’s long-term business strategy while offering shareholders a substantial premium. The C$1.50 per share offer not only provides immediate liquidity but also secures a certain value, effectively eliminating the potential volatility associated with remaining invested in Givex over the long term.

The premium price reflects Givex’s established position in the global market, where the company operates over 132,000 active locations across more than 100 countries. The acquisition by Shift4, which is known for powering billions of transactions annually across diverse industries, is expected to significantly enhance the combined entity’s market position.

Don Gray, CEO of Givex, expressed optimism about the merger, stating, “The Givex team is excited to become part of the Shift4 family, where our enterprise gift card capabilities and loyalty programs will reach hundreds of thousands of new customers.” This sentiment is echoed by Taylor Lauber, President of Shift4, who remarked, “Givex’s global presence and superior solutions will add immense value for our customers, creating stronger, stickier relationships that enhance our overall value proposition.”

Deal Mechanics and Shareholder Commitment

Under the terms of the agreement, Shift4 will acquire all outstanding Givex shares for C$1.50 per share, amounting to a total equity value of C$200 million. This represents a decisive move for Shift4, solidifying its position in the global payments market. The transaction will be completed through a statutory plan of arrangement, a method often used in Canada to effect mergers and acquisitions, ensuring that the deal is executed with legal and financial precision.

One of the critical elements of this transaction is the voting support from significant Givex shareholders. Givex’s directors, executive officers, and major shareholders, who collectively own 57.4% of the company’s outstanding shares, have entered into voting agreements to support the deal. This broad support signals strong confidence in the transaction and minimizes the risk of shareholder dissent.

However, the arrangement agreement includes provisions to address any potential competing offers. If a superior proposal emerges, Givex has retained the right to entertain it, albeit with the stipulation of a C$7.75 million termination fee payable to Shift4 if the current agreement is terminated under specific circumstances. This fee acts as a safeguard for Shift4, ensuring that it is compensated for the time and resources invested in the acquisition process should a more attractive offer come to light.

Regulatory and Shareholder Approvals

The transaction is subject to several closing conditions, including approval from the Ontario Superior Court of Justice and the approval of Givex shareholders at a special meeting. The deal requires the affirmative vote of at least two-thirds of the shares represented at the meeting. Additionally, in compliance with Multilateral Instrument 61-101 – Protection of Minority Securityholders in Special Transactions (MI 61-101), the transaction may also need a simple majority vote excluding certain insiders.

Given the transaction’s structure and the significant premium offered, industry analysts expect a smooth approval process. The acquisition is anticipated to close by the end of the year, assuming all conditions are met. Post-transaction, Givex shares will be delisted from the TSX, and the company will apply to cease being a reporting issuer under Canadian securities laws.

Broader Market Implications

This acquisition is not just a significant milestone for Shift4 and Givex; it is also indicative of broader trends in the payments and technology sectors. As companies increasingly seek to consolidate and expand their offerings, acquisitions like this one are becoming more common. Shift4’s acquisition of Givex follows a trend where larger players absorb niche companies to enhance their technological capabilities and expand their market reach.

In the context of global competition, this deal positions Shift4 as a formidable player in the global commerce technology space. The acquisition will likely lead to enhanced service offerings for both companies’ customers, combining Shift4’s robust payment processing infrastructure with Givex’s advanced customer engagement solutions.

Advisors and Future Outlook

For this transaction, Canaccord Genuity Corp. served as the exclusive financial advisor to Givex, with Wildeboer Dellelce LLP providing legal counsel. The special committee of Givex was advised by Torys LLP. On the other side, Goldman Sachs & Co. LLC acted as the exclusive financial advisor to Shift4, with Bennett Jones LLP serving as its legal counsel.

The successful integration of Givex into Shift4’s operations will be closely watched by industry analysts and competitors alike. This acquisition, while primarily beneficial for shareholders, also represents a significant step in Shift4’s long-term strategy to become a global leader in the payments and commerce-enabling technology industry.