Transaction Positions Grid Dynamics to Execute
on Compelling Growth Opportunities in the Rapidly Expanding Digital
Transformation Services Industry
Joint Investor Conference Call to be held on
November 13, 2019 at 11:00am ET
Grid Dynamics International, Inc. (“Grid Dynamics”), a leader in
driving enterprise-level digital transformation, today announced
that it has entered into a definitive merger agreement with ChaSerg
Technology Acquisition Corp. (Nasdaq: CTAC) (“ChaSerg”), a special
purpose acquisition company led by Chief Executive Officer Lloyd
Carney and President and Chief Financial Officer Eric Benhamou.
Upon completion of the combination, Grid Dynamics will become a
Nasdaq-listed public company, with an anticipated initial equity
market capitalization of approximately $515 million based on a
stock price of $10.00 per share. Immediately upon consummation of
the transaction, ChaSerg will change its name to “Grid Dynamics
Holdings, Inc.”
Grid Dynamics Investment Highlights:
- Leader in driving enterprise-level digital transformation for
Fortune 1000 companies
- Large and rapidly growing market opportunity estimated to
exceed $750 billion by 2025, with current addressable market in
excess of $100 billion
- Strong technical expertise in the rapidly growing fields of
artificial intelligence (AI), data science, cloud computing,
microservices, and DevOps
- Stable and predictable business model driven by high value,
high impact services and a proven track-record of growth with
existing and new customers
- Demonstrated ability to attract, train, and retain top-digital
engineers
- Globally integrated delivery model leveraging close
collaboration with clients and optimized staffing to ensure
superior client ROI and an efficient cost structure
- Proven platform with multiple avenues for continued growth
- Compelling financial profile:
- Estimated 2019 revenue of $116-$117 million and adjusted
non-GAAP EBITDA of $23.6-$24.3 million
- 2015 - 2019E organic revenue CAGR of ~30%, and 20%+ adjusted
non-GAAP EBITDA margin
- Superior 2018 revenue per employee of $93,000 per year,
approximately 50% higher than publicly traded peers including EPAM
Systems, Endava PLC and Globant SA.
- Demonstrated growth and retention of top accounts resulting in
an expected two and a half times increase in spend of top 10
clients over the past 5 years
- Highly experienced and cohesive management team led by Leonard
Livschitz, CEO of Grid Dynamics
Lloyd Carney, CEO of ChaSerg, stated, “After a thorough search
process, in which we conducted a comprehensive analysis of multiple
potential business combinations, Grid Dynamics stood above the rest
as an ideal partner that we believe could deliver the best
long-term shareholder value. Leonard and the entire management team
have built a truly impressive organization, establishing Grid
Dynamics as a market leading provider of digital transformation
services. Their impressive blue-chip client base and the number of
long-standing and growing relationships they have nurtured is a
testament to their leading capabilities, unique delivery model, and
client-centric culture underpinned by an employee base of leading
digital engineers. Furthermore, Grid Dynamics’ attractive financial
profile and multiple avenues for growth in a rapidly expanding
market give us great confidence in their long-term growth
strategy.”
Mr. Carney continued, “With an implied initial enterprise value
of approximately 13 times Grid Dynamics’ estimated 2020 adjusted
non-GAAP EBITDA, we view this transaction as attractive when
compared with the company’s publicly traded peers, which currently
trade at an average 2020 EV/EBITDA multiple of approximately 22
times. We are thrilled to help facilitate Grid Dynamics’ listing on
the Nasdaq, and excited to partner with Leonard and the rest of the
team as they continue to grow as a public company.”
Leonard Livschitz, CEO of Grid Dynamics, stated, “Today’s
announcement marks the beginning of an exciting new chapter in our
company’s history. The digital economy is profoundly changing the
way we access information, goods and services, and as a result,
challenging how businesses are currently structured and how their
business models function. As a result, virtually every major
enterprise across every industry is exploring digital
transformation to remain competitive. At Grid Dynamics, our focus
has always been exclusively on enabling our clients’ digital
transformation journeys through technology consulting and high
quality engineering, with the goal of helping our clients achieve
their most critical business objectives. We are thrilled to be
entering into this transaction with ChaSerg to become a publicly
traded company. With access to new sources of capital and
liquidity, Grid Dynamics will be able to address our client’s need
better than ever before, and I am honored to be leading our
organization as we continue to grow.”
Following the completion of the business combination, the
combined company will continue to be led by Leonard Livschitz, CEO
of Grid Dynamics. In addition, Lloyd Carney and Eric Benhamou will
join Grid Dynamics’ Board of Directors.
Summary of Transaction
Under the terms of the proposed transaction, the business
combination will be effected through a merger pursuant to which
Grid Dynamics will be acquired by a subsidiary of ChaSerg and
become a publicly traded entity under the name “Grid Dynamics
Holdings, Inc.”
Assuming no redemptions by the public stockholders of ChaSerg,
the balance of the approximately $224 million in cash held in
ChaSerg’s trust account will be used to pay the existing Grid
Dynamics shareholders cash consideration of $130 million. The
remainder of the consideration payable to the existing Grid
Dynamics shareholders will consist of approximately 25.5 million
shares of ChaSerg common stock. In addition, Grid Dynamics is
expected to add approximately $80 million of cash at close, net of
transaction expenses and fees, which may be used for acquisitions
or other strategic priorities.
The transaction has been approved by the boards of directors of
both Grid Dynamics and ChaSerg. Completion of the transaction is
subject to approval by stockholders and certain other conditions.
The transaction is expected to close in the first quarter of
2020.
Additional information about the business combination will be
provided in a preliminary proxy statement to be filed with the
Securities and Exchange Commission, and will be available at the
SEC website at www.sec.gov.
Cantor Fitzgerald and William Blair are acting as capital
markets advisors to ChaSerg. Latham & Watkins LLP and Ellenoff,
Grossman and Schole are serving as legal counsel to ChaSerg.
Covington Associates LLC is acting as financial advisor to Grid
Dynamics. Wilson Sonsini Goodrich & Rosati, P.C. are acting as
legal counsel to Grid Dynamics. Reed Smith Richards Butler, LLP is
serving as legal counsel to Automated Systems Holdings Limited.
Conference Call Information
At 11:00 AM ET on November 13, 2019, Grid Dynamics and ChaSerg
will host a joint conference call to discuss the business
combination with the investment community. Hosting the call will be
Leonard Livschitz, CEO of Grid Dynamics, Lloyd Carney, CEO of
ChaSerg, and Eric Benhamou, President and CFO of ChaSerg.
For those who wish to participate, the domestic toll-free access
number is 1-877-270-2148 (access code: “Grid Dynamics call”), or
for international callers, 1-412-902-6510 (access code: “Grid
Dynamics call”). A telephone replay will be available shortly after
the call and can be accessed by dialing 1-877-344-7529 (access
code: 10136718), or for international callers, 1-412-317-0088
(access code: 10136718).
A webcast of the call, along with this press release and the
investor presentation, can be accessed at:
https://chasergtechnology.com/
About Grid Dynamics
Grid Dynamics is a leader in driving enterprise-level digital
transformation services for Fortune 1000 corporations. We work in
close collaboration with our clients on digital transformation
initiatives that span strategy consulting, early prototypes and
enterprise-scale delivery of new digital platforms. We help
organizations become more agile and create innovative digital
products and experiences using deep expertise in emerging
technology, top global engineering talent, lean software
development practices, and a high-performance product culture. Our
secret sauce is in applying emergent technologies such as
artificial intelligence, data science, cloud computing, Big Data
and DevOps to enable digital transformation across the enterprise.
Headquartered in the San Francisco Bay Area with over a thousand
technologists located in engineering delivery centers throughout
the US, Central and Eastern Europe, Grid Dynamics is known for
architecting and delivering some of the largest digital
transformation programs in the retail, technology and financial
sectors to help its clients win market share, shorten time to
market and reduce costs of digital operations on a massive scale.
To learn more about Grid Dynamics, visit www.griddynamics.com, or
follow us on Twitter @GridDynamics.
About ChaSerg
ChaSerg Technology Acquisition Corp. is a blank check company
formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or
similar business combination with one or more businesses. While our
efforts to identify a target business may span many industries and
regions around the world, we intend to focus our search for
prospects within the technology industry. ChaSerg is led by Chief
Executive Officer Lloyd Carney and President and Chief Financial
Officer Eric Benhamou.
Non-GAAP Financial Measures
Adjusted EBITDA is a non-GAAP measure. Grid Dynamics believes
Adjusted EBITDA provides useful information to management and
investors regarding Grid Dynamics’ business and results of
operations. Because Adjusted EBITDA is not in conformity with GAAP,
we urge you to review Grid Dynamics’ audited financial statements
that will be filed with the SEC in ChaSerg's proxy statement.
Adjusted EBITDA is defined by Grid Dynamics as Earnings Before
Interest, Taxes, Depreciation and Amortization (“EBITDA”), and
excludes Stock-Based Compensation Expense and Transaction Expense,
which may not be calculated consistently among other companies
applying similar reporting measures.
Adjusted EBITDA is not a measure of financial performance under
generally accepted accounting principles and should not be
considered as an alternative to, or more meaningful than, net
income as a measure of operating performance or to cash flows from
operating, investing or financing activities or as a measure of
liquidity.
Forward-Looking Statements
This communication contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 that are not
historical facts, and involve risks and uncertainties that could
cause actual results of ChaSerg and Grid Dynamics to differ
materially from those expected and projected. These forward-looking
statements can be identified by the use of forward-looking
terminology, including the words “believes,” “estimates,”
“anticipates,” “expects,” “intends,” “plans,” “may,” “will,”
“potential,” “projects,” “predicts,” “continue,” or “should,” or,
in each case, their negative or other variations or comparable
terminology. These forward-looking statements include, without
limitation, statements concerning: ChaSerg’s and Grid Dynamics’s
expectations with respect to future performance, market size and
anticipated financial impacts of the proposed business combination
(the “Business Combination”); the satisfaction of the closing
conditions to the Business Combination; and the timing of the
completion of the Business Combination.
These forward-looking statements involve significant risks and
uncertainties that could cause the actual results to differ
materially from the expected results. Most of these factors are
outside ChaSerg’s and Grid Dynamics’s control and are difficult to
predict. Factors that may cause such differences include, but are
not limited to: (i) the occurrence of any event, change or other
circumstances that could give rise to the termination of the Merger
Agreement or could otherwise cause the Business Combination to fail
to close; (ii) the outcome of any legal proceedings that may be
instituted against ChaSerg and Grid Dynamics following the
execution of the Merger Agreement and the Business Combination;
(iii) any inability to complete the Business Combination, including
due to failure to obtain approval of the stockholders of ChaSerg or
other conditions to closing in the Merger Agreement; (iv) the
receipt of an unsolicited offer from another party for an
alternative business transaction that could interfere with the
Business Combination; (v) the inability to maintain the listing of
the shares of common stock of the post-acquisition company on The
Nasdaq Stock Market following the Business Combination; (vi) the
risk that the Business Combination disrupts current plans and
operations as a result of the announcement and consummation of the
Business Combination; (vii) the ability to recognize the
anticipated benefits of the Business Combination, which may be
affected by, among other things, competition, the ability of the
combined company to grow and manage growth profitably and retain
its key employees; (viii) costs related to the Business
Combination; (ix) changes in applicable laws or regulations; (x)
the possibility that Grid Dynamics or the combined company may be
adversely affected by other economic, business, and/or competitive
factors; and (xi) other risks and uncertainties indicated in
ChaSerg’s filings with the SEC.
ChaSerg cautions that the foregoing list of factors is not
exclusive. ChaSerg cautions readers not to place undue reliance
upon any forward-looking statements, which speak only as of the
date made. ChaSerg does not undertake or accept any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements to reflect any change in its
expectations or any change in events, conditions or circumstances
on which any such statement is based. Further information about
factors that could materially affect ChaSerg, including its results
of operations and financial condition, is set forth under “Risk
Factors” in Part I, Item 1A of ChaSerg’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2018 and in Part II, Item 1A
of ChaSerg’s Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 2019, June 30, 2019 and September 30, 2019.
No Offer or Solicitation
This communication shall not constitute a solicitation of a
proxy, consent or authorization with respect to any securities or
in respect of the Business Combination. This communication shall
also not constitute an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of
securities in any states or jurisdictions in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of section 10 of the Securities
Act, or an exemption therefrom.
Important Information for Investors and Stockholders
In connection with the proposed transaction, ChaSerg intends to
file a proxy statement with the SEC. The definitive proxy statement
and other relevant documents will be sent or given to the
stockholders of ChaSerg and will contain important information
about the proposed transaction and related matters. ChaSerg’s
stockholders and other interested persons are advised to read, when
available, the proxy statement in connection with ChaSerg’s
solicitation of proxies for the meeting of stockholders to be held
to approve the transaction because the proxy statement will contain
important information about the proposed transaction. When
available, the definitive proxy statement will be mailed to
ChaSerg’s stockholders as of a record date to be established for
voting on the transaction. Stockholders will also be able to obtain
copies of the proxy statement, without charge, once available, at
the SEC’s website at www.sec.gov.
Participants in the Solicitation
ChaSerg and its directors and officers may be deemed
participants in the solicitation of proxies of ChaSerg’s
stockholders in connection with the proposed transaction. ChaSerg
stockholders and other interested persons may obtain, without
charge, more detailed information regarding the directors and
officers of ChaSerg in its Annual Report on Form 10-K for the year
ended Dec. 31, 2018 filed with the SEC. Additional information will
be available in the definitive proxy statement when it becomes
available.
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version on businesswire.com: https://www.businesswire.com/news/home/20191113005184/en/
Media Erin Gilmore Activate PR + Marketing 512-466-4559
egilmore@activateprmktg.com
ChaSerg Lloyd Carney Chief Executive Officer ChaSerg Technology
Acquisition Corp. (619) 736-6855
Grid Dynamics Investors William Maina ICR for Grid Dynamics
646-277-1236 William.Maina@icrinc.com
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