Public relations software company Cision is going public with the help of a $325 million cash infusion from a D.C.-based “blank check” company led by serial investor Mark Ein.
Under terms announced Monday, Cision’s private equity parent company, Chicago-based GTCR, will transfer Cision into a wholly owned subsidiary of Ein’s Capitol Acquisition Corp. III (NASDAQ: CLACU). The two will then be merged, with Cision becoming a publicly traded company initially valued at about $2.4 billion.
A "blank check" company raises funds in an initial public offering and then invests in, merges with or buys another company. Investors buy up shares in the blank check company as a kind of bet on the person leading it to make a good choice. In this case, Ein, a venture capitalist who owns security company Kastles Systems International, raised $325 million from interested investors back in 2015.
Why go this route? Cision can go public and bypass the uncertainty of pricing itself on the public market (and shopping itself to banks and other investors), opting instead for the certainty of a merger with a publicly traded company. The existing private shareholders of Cision can sell their shares on the public market instead of having to sell the entirety of the company.
GTCR and its management will retain 100 percent of its equity in the company, while Capitol Acquisition Corp. III shareholders will own 32 percent of Cision after the merger is complete. Cision shareholders will earn up to 2 million additional shares of common stock when the company hits the $13 per share, $16 per share and $19 per share milestones, for a maximum of 6 million shares. The remaining cash will be used to pay down Cision’s existing debt.
Cision CEO Kevin Akeroyd and CFO Jack Pearlstein will continue to run the combined company. Ein will join the company's board as vice chairman, and Capitol Acquisition Corp. III CFO Dyson Dryden will also join the board.
Akeroyd said in a statement that the acquisition marks a "key milestone for Cision" and that the company is well-positioned to accelerate its growth. The companies expect to complete the deal in the second quarter.
GTCR had in 2014 closed on its $446.5 million purchase of Beltsville-based Vocus, a publicly traded PR firm that GTCR then combined with Cision and moved to Chicago that year.
As for Ein, this is the third time he has done this. Capitol Acquisition Corp. II, which had its IPO in May 2013, announced its merger with what was then Lindblad Expeditions Inc. in March 2015 in a $439 million deal.
In 2009, the first Capitol Acquisition Corp. created Two Harbors Investment Corp., a Maryland real estate investment trust, in partnership with Pine River Capital Management LP to capitalize on residential mortgage-backed securities.
Ein's portfolio also includes Falls Church-based Kastle Systems, venture capital firm Venturehouse Group LLC, World TeamTennis and the Washington Kastles, a WTT franchise.
