Epiq Systems, Inc. (“Epiq”) (NASDAQ: EPIQ), a leading global provider of integrated technology and services for the legal profession, today announced that it has entered into a definitive agreement to be acquired by OMERS Private Equity, the private equity arm of the OMERS pension plan, and funds managed by Harvest Partners, LP, a leading middle-market private equity fund, for $16.50 per share in cash. The transaction, which represents a 42% premium to Epiq’s unaffected closing share price of $11.63 as of February 19, 2016, the last trading day before a media report speculating about potential offers for the company, has a total value of approximately $1.0 billion including assumed debt obligations.
The Epiq board of directors unanimously approved the transaction and recommends that Epiq shareholders vote in favour of the transaction. Under the terms of the agreement, upon the closing of the transaction, Epiq shareholders will receive $16.50 in cash for each share of Epiq’s common stock. Upon completion of the transaction, Epiq will become a privately-held company and will be combined with DTI, a leading global legal process outsourcing (LPO) company majority-owned by OMERS and managed by OMERS Private Equity.
The proposed transaction is expected to close in the fourth quarter of 2016, subject to customary closing conditions including receipt of shareholder and regulatory approvals. The transaction requires the affirmative vote of the holders of at least two-thirds of the outstanding shares of Epiq’s common stock entitled to vote on the transaction, which will be sought at a special meeting of Epiq’s shareholders. Each of St. Denis J. Villere & Company, LLC and P2 Capital Partners, LLC, the two largest shareholders of the company, Tom W. Olofson, founder, chairman and chief executive officer of the company, and the company’s directors and other executive officers have signed voting support agreements in support of the transaction, representing approximately 38% of the total issued and outstanding shares of common stock of the company.
Douglas M. Gaston, the chairman of the Strategic Alternatives Committee of the Epiq Board of Directors, commented, “This transaction represents the successful culmination of a comprehensive review of strategic and financial alternatives to maximize value for all of Epiq’s shareholders. After careful consideration, the Board determined that this transaction with OMERS Private Equity and Harvest Partners represents the highest and best offer received, offering Epiq shareholders at closing with immediate cash value at a substantial premium.”
Olofson said, “We believe this transaction is in the best interest of our shareholders, clients, associates experienced and world-class investors that have an extensive understanding of the legal technology solutions and services industry. Our management team and colleagues look forward to the new opportunities for growth with DTI.”
Eric Haley, managing director of OMERS Private Equity, said, “Epiq and DTI are both recognized as excellent service providers and market innovators. This combination will produce a global firm with best-in-class solutions and significant opportunities for growth in the dynamic legal technology industry.” Michael Graham, Head of North America of OMERS Private Equity added, “This combination is indicative of the confidence we have in the DTI platform and the future of the legal process outsourcing industry and we are excited to partner with the Epiq team to enhance the growth of these two exceptional companies.”
“We are excited to invest in this combination of two global legal technology solutions and services companies,” said Andrew Schoenthal, managing director of Harvest Partners. “We are looking forward to once again partnering with John Davenport Jr. and DTI, and have great respect for Epiq and what they have accomplished,” added Ira Kleinman, senior managing director of Harvest Partners.
Combination of Epiq and DTI to Deliver Significant Benefits to Clients, Partners and Employees
The combination of Epiq and DTI is expected to deliver significant benefits to clients, partners and employees, including:
broadened range of service solutions and products
expanded geographic footprint
combined deep bench of expertise
bolstered data security protocols
commitment to exceptional client service, and
increased opportunities for employees.
John Davenport Jr., founder and chief executive officer of DTI, commented, “Epiq is an industry leader with significant growth potential and aligns perfectly with our objective of delivering excellence in legal process outsourcing wherever our clients operate. This combination will expand our platform in scope, geographic reach and innovative capabilities. As we plan to integrate the two businesses, we will continue to deliver the high-quality solutions and client-centric focus that our clients have come to expect.” Davenport continued, “We look forward to welcoming the Epiq management team and their talented employees in serving our combined global client base more effectively and efficiently than ever before.”
Brad D. Scott, president and chief operating officer of Epiq, said, “This combination brings together two highly complementary legal services and technology companies with global reach and deep expertise. With the support of Omers Private Equity and Harvest Partners, we have the opportunity to leverage each company’s strengths to create a combined entity well positioned to be the world’s preferred strategic partner for complex and outsourced legal matters. We are excited to work with the DTI team to enhance the value of all of our service offerings to clients worldwide.”
Credit Suisse Securities (USA) LLC is serving as exclusive financial advisor to Epiq Systems and Kirkland & Ellis LLP is serving as legal counsel. Wells Fargo Securities is serving as exclusive financial advisor to DTI, and Weil, Gotshal & Manges LLP and Bryan Cave LLP are serving as legal counsel. Wells Fargo Securities is serving as exclusive financial advisor to OMERS Private Equity and Weil, Gotshal & Manges LLP is serving as legal counsel. BofA Merrill Lynch is serving as exclusive financial advisor to Harvest Partners and White & Case LLP is serving as legal counsel. Bank of America Merrill Lynch and Goldman Sachs are joint lead arrangers and joint bookrunners for the credit facilities.