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ConvergeOne To Be Acquired For $1.8 Billion

In an all-cash deal, CVC Fund VII will pay investors $12.50 per share, a 56 percent increase in value from its February IPO price.

ConvergeOne Holdings, a global IT and managed services provider that went public less than a year ago, Tuesday said it has agreed to be acquired by CVC Fund VII in an all-cash transaction valued at approximately $1.8 billion.

Subject to customary closing conditions and regulatory approvals, ConvergeOne expects the transaction to close in the fourth quarter of 2018 or the first quarter of 2019. ConvergeOne will maintain its corporate headquarters in Eagan, Minn., and continue to be led by its current executive team.

"Today's announcement is a tremendous accomplishment for ConvergeOne and highlights the continued success of the company,” John A. McKenna Jr., chairman and CEO of ConvergeOne, said in a statement. “We are extremely proud of the ConvergeOne team, and we truly appreciate our phenomenal partnership with Clearlake and our other shareholders that has resulted in significant value creation. Our team is thrilled to partner with CVC to execute on the compelling growth opportunities in the rapidly evolving collaboration and technology services market."

ConvergeOne is No. 34 on the 2018 CRN Solution Provider 500. The company hosted an earnings call last week in which it reported $404 million in quarterly revenue, an increase of 64.4 percent from a year ago, it said.

The company went public and started trading on the Nasdaq on Feb. 23, and in its most recent earnings call raised guidance for the year, telling investors that annual revenue would land between $1.55 billion and $1.65 billion.

CVC, the company buying the ConvergeOne, refused to comment to CRN beyond its initial statement. A ConvergeOne spokesperson did not respond to an email seeking comment.

"We are very impressed by the momentum of ConvergeOne and share their excitement for the company's growth potential,” Chris Colpitts, senior managing director of CVC, said. “ConvergeOne has a significant opportunity to capitalize on the cloud adoption and digital transformation tailwinds of its enterprise customers. Using our industry expertise and global network, we look forward to supporting ConvergeOne's continued growth, both organically and through its proven M&A program."

ConvergeOne's board of directors unanimously approved the deal and, according to a company statement, it believes the transaction “maximizes shareholder value.” CVC will pay investors $12.50 per share, a 56 percent increase in value from its IPO price.

The company’s largest shareholder is Clearlake Capital Group, as well as being its private equity sponsor. Clearlake, combined with the directors and officers of ConvergeOne, together hold approximately 68 percent of the company. All have agreed to tender their shares in the offer pursuant to a tender and support agreement, ConvergeOne said in a statement.

“Together with management, we transformed the company into a world-class managed services franchise, achieving approximately 400 percent EBITDA growth through the period of our ownership since 2014, completing a public listing, and ultimately maximizing shareholder value through this transaction,” Behdad Eghbali, co-founder and managing partner of Clearlake, said in a statement. “We are proud to have partnered with John [McKenna] and his team and look forward to watching the company's continued growth in the future."

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