intelliHR Board unanimously recommends proposal for the acquisition of intelliHR by Humanforce Holdings Pty Ltd and enters into Scheme Implementation Deed
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ASX: IHR Release - 31st Jan, 2023
intelliHR Board unanimously recommends proposal for the acquisition of intelliHR by Humanforce Holdings Pty Ltd and enters into Scheme Implementation Deed.
Highlights
IHR announces entry into Scheme Implementation Deed (“SID”) with Humanforce Holdings Pty Ltd (“Humanforce”), an Accel-KKR portfolio company
Under the proposed Scheme of Arrangement (“Scheme”), IHR shareholders will be entitled to receive $0.11 cash per share (“Scheme Consideration”)
The Scheme Consideration implies an Equity Value of $38.6 million1 represents an attractive premium for IHR shareholders of:
75% premium to the last trading price of IHR shares on 30 January 20232
77% premium to the 1-month volume weighted average price (“VWAP”) of IHR shares3
80% premium to the 4-month VWAP of IHR shares4
The IHR Board of Directors unanimously recommends that IHR shareholders vote in favour of the Scheme, and each director intends to vote all of the IHR shares held or controlled by them5 in favour of the Scheme in the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of IHR shareholders
IHR’s largest shareholder, Colinton Capital6, which controls (14.6%) of IHR’s ordinary shares on issue as at the date of this announcement, has expressed its intention to vote all of the shares it controls in favour of the Scheme, subject to no superior proposal arising, and has entered into a voting and acceptance deed with Humanforce
A Scheme Booklet containing detailed information on the Scheme, including an Independent Expert’s Report, will be issued to IHR shareholders in due course
The Scheme is subject to Foreign Investment Review Board (“FIRB”) approval and other customary conditions, including IHR shareholder and court approval, which must be satisfied before the Scheme is implemented
IHR shareholders do not need to take any action at the present
intelliHR Limited (ASX: IHR) announces that it has entered into a Scheme Implementation Deed (“SID”) with Humanforce Holdings Pty Ltd (“Humanforce”), a majority owned subsidiary of funds advised by Accel-KKR, a leading software investment firm, under which it is proposed that Humanforce will acquire all of the issued shares in IHR for $0.11 cash per share by way of a recommended Scheme of Arrangement (“Scheme”).
IHR Chair & CEO Matt Donovan commented, “The Board believes the proposed all-cash offer represents attractive value and provides an immediate opportunity for shareholders to realise certain value at a significant premium to the market.
The Board has carefully considered the advantages and disadvantages of the proposed Scheme and believes the offer price of $0.11 cash per share provides shareholders with certainty of value today for the potential of our business.
IHR has achieved considerable success to date in Australia and early traction in international markets and while, in the long-term, there remains potential future growth trajectory, this has to be balanced with the business and market risks and continuing cash burn in this phase of the company’s evolution that IHR shareholders face remaining as a publicly listed independent company.”
Humanforce Chief Executive Officer, Clayton Pyne commented, "There is a compelling synergy between IHR and Humanforce, who share the vision of enabling businesses to drive automated compliance, cost optimisation and engagement by revolutionising the employee experience, through intelligent, employee-centred technology. Through this acquisition, Humanforce will be even better positioned to deliver on its mission to make work easier and life better for deskless workforces.
Humanforce will build on its best-of-breed, integrated workforce management and payroll solution to deliver a full HCM suite with the addition of employee engagement, performance, learning and retention, underpinned by a rich, deep layer of AI-powered workforce analytics, and a single system of record Core HR.
This rich all-in-one HCM offering will unlock new and exciting opportunities for Humanforce and IHR customers alike as they gain access to an unparalleled combination of tools and data, enabling intelligent data-driven decision making, from employee engagement, culture, wellbeing, and performance, to risk and compliance.”
Accel-KKR Managing Director, Joe Porten commented, “Humanforce continues to accelerate its growth by deliberately seeking complementary, world-class people management solutions that together, have the power to transform the employee experience and better meet the needs of deskless workforces. Building on the depth and breadth of Humanforce’s platform will continue to enhance its value to customers through differentiated, tightly integrated and highly configurable capabilities.”
Overview of the Scheme
Under the terms of the Scheme, IHR shareholders will be entitled to receive $0.11 per share in cash, subject to applicable conditions being satisfied or waived and the Scheme being implemented.
The Scheme Consideration implies a fully diluted Equity Value of approximately $38.6 million7 for IHR and represents an attractive premium for IHR shareholders of:
a 75% premium to IHR’s closing price of $0.063 on Monday, 30 January 2023, being the last being the last trading day prior to this announcement;
a 77% premium to IHR’s 1-month VWAP of $0.062 on Monday, 30 January 2023, being the last trading day prior to this announcement; and
an 80% premium to IHR’s 4-month VWAP of $0.061 to Monday, 30 January 2023, being the last trading day prior to this announcement.
Humanforce is a leading provider of workforce management and payroll solutions for deskless workforces that simplifies onboarding, scheduling, time and attendance, payroll, employee engagement and communication. Customers in more than 23 countries use Humanforce to optimise costs, realise compliance confidence, empower their team and drive growth. Customers include Secure Parking, Flight Centre, Aveo, Estia, Accor, Delaware North and more. Humanforce was founded in Sydney in 2002 and today has offices across Australia, New Zealand and the UK.
Accel-KKR is a technology-focused investment company with more than $14 billion in capital under management. The company focuses on software and information technology companies. At the heart of Accel-KKR’s investment strategy is a commitment to developing strong partnerships with the management teams of its portfolio companies and a focus on creating joint value, leveraging the significant resources available through its network. Accel-KKR focuses on mid-market companies and offers a wide range of equity solutions including buy-out capital, minority growth investments, and credit alternatives. It also invests via a wide range of transaction types, including recapitalizations of private companies, carve- outs of divisions, and going-private transactions. Accel-KKR is headquartered in Menlo Park with additional offices in Atlanta, London, and Mexico City.
IHR Board unanimously recommends the Scheme
The Directors of IHR have unanimously agreed to enter into the SID and unanimously recommends that IHR shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of IHR shareholders.
Each Director of IHR has also confirmed that, in the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of IHR shareholders, they intend to vote all of the IHR shares held or controlled by them (representing approximately 2.4% of IHR’s ordinary shares on issue as at the date of this announcement) in favour of the Scheme.
The IHR Board believe that this is an attractive offer for IHR shareholders for the following reasons:
Significant premium: The Scheme Consideration represents a premium of 80% to IHR’s 4-month VWAP of $0.061 and a 77% premium to IHR’s 1-month VWAP of $0.062 to IHR’s closing price on Monday, 30 January 2023;
Certainty of value: The 100% cash consideration provides IHR shareholders with certainty of value and the opportunity to realise their investment in full for cash;
Limited conditionality: The Scheme is subject to FIRB approval and conditions customary for transactions of this type and is not conditional on financing or due diligence.
Major Shareholder voting intentions
IHR’s largest shareholder, Colinton Capital8, which controls (14.6%) of IHR’s ordinary shares on issue as at the date of this announcement, has expressed its intention to vote all of the shares it controls in favour of the Scheme, subject to no superior proposal arising, and has entered into a voting and acceptance deed with Humanforce.
Scheme Conditions and other terms
IHR and Humanforce have entered into the attached SID, which contains the terms upon which IHR and Humanforce will implement the Scheme. The key conditions of the Scheme include:
receipt of FIRB approval;
the approval of IHR shareholders of the Scheme at the Scheme meetings by the requisite majorities, and the approval of the Court, in accordance with the Corporations Act 2001 (Cth);
no IHR material adverse change, prescribed occurrences or material breach of representations and warranties as defined in the SID;
an Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of IHR shareholders; and other customary conditions customary for a transaction of this nature.
The SID also includes exclusivity provisions customary for a transaction of this nature, the payment of a mutual break fee in certain prescribed circumstances and maximum limitations of liability provisions in favour of each party.
Indicative timetable and next steps
IHR shareholders do not need to take any action in relation to the Scheme at this stage. A Scheme Booklet containing information in relation to the Scheme, reasons for the IHR Board recommendation and an Independent Expert’s Report will be sent to IHR shareholders in due course. It is anticipated that the Scheme will be implemented in the first half of calendar year 2023 (subject to satisfaction or waiver of the relevant conditions). These dates are indicative and subject to change.
Advisers
The IHR Board has engaged Colin Biggers & Paisley Lawyers as its legal adviser. Humanforce has engaged Johnson Winter Slattery as its legal counsel
Authorised for release by the intelliHR Board
intelliHR Investor Relations investor.relations@intellihr.com
About ASX:IHR
intelliHR is the intelligent people platform that empowers global leaders to make more intelligent people decisions. Helping them create an inclusive, engaging, performing, and aligned working culture. The intelliHR platform is the cloud- based way to drive employee engagement, performance and retention, in today’s hybrid working world. Easily implemented, employing best-of-breed integrations, with powerful data at its core, intelliHR is the HR software choice for 330+ progressive organisations and over 84,000 users across 20 countries. For more information, visit www.intellihr.com
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1 Based on IHR ordinary shares on issue in addition to the performance rights expected to be accelerated in connection with the transaction of 350,545,983.
2 Based on IHR’s closing price on Monday, 30 January 2023 of $0.063 per share.
3 Based on IHR’s 1-month VWAP on Monday, 30 January 2023 of $0.062 per share.
4 Based on IHR’s 4-month VWAP on Monday, 30 January 2023 of $0.061 per share.
5 Representing approximately 2.4% of IHR’s ordinary shares as at the date of this announcement.
6 Colinton Capital comprises Colinton Capital Pty Ltd, Colinton Capital Partners Fund I (A) Pty Ltd as trustee for Colinton Capital Partners Fund I (A) and their associates.
7 Based on IHR ordinary shares on issue in addition to the performance rights expected to be accelerated in connection with the transaction of 350,545,983.
8 Colinton Capital comprises Colinton Capital Pty Ltd, Colinton Capital Partners Fund I (A) Pty Ltd as trustee for Colinton Capital Partners Fund I (A) and their associates.