HH Global in mega-merger
Friday, July 17, 2020
HH Global is taking over its much larger rival InnerWorkings in a $177m marketing services mega-merger.
Yesterday Leatherhead-headquartered HH Global and Chicago-headquartered InnerWorkings announced that they had signed a definitive agreement to combine their operations.
InnerWorkings is listed on the Nasdaq stock exchange. HH Global will acquire the business for $3 per share in a $177m all-cash deal.
InnerWorkings’ share price slumped at the beginning of the year and subsequently fell to a five-year low of $0.87. The $1.16bn turnover group’s market capitalisation is currently $150m. It had gross profits of $260m in its most recent financial year but made a $10m net loss. However, that was a big improvement on the $77m net loss filed in 2018. The firm employs more than 2,000 people worldwide and its biggest presence is in North America.
Clients include Adidas, Unilever, HSBC, FedEx and Procter & Gamble.
The UK-based InnerWorkings Europe operation had sales of £33.4m in 2018. Across EMEA, InnerWorkings places work with nearly 3,400 suppliers.
Fast-growing HH Global had sales of £397.3m in the year to 31 March 2019, with its 2020 results expected shortly.
At the end of last year investment group Blackstone made a £100m investment in the business, and Blackstone is also supporting the takeover.
HH Global chairman and CEO Robert MacMillan said he was “thrilled about this combination”.
“Not only do our two companies have complementary offerings, capabilities and geographic operations, but we also share a deep commitment to quality, innovation and operational excellence,” he said.
“We have long admired InnerWorkings and have got to know the management team well over the last few months, and we are confident that together we will create an even stronger company. We look forward to welcoming InnerWorkings to the HH Global family.”
InnerWorkings CEO Rich Stoddart said the firm’s board had explored “a range of financing and strategic alternatives”, along with cost-saving measures in response to the Covid-19 pandemic, as part of moves to “preserve and enhance value for shareholders”.
“We’re confident this combination represents the best path forward for our shareholders and InnerWorkings. In addition to delivering an immediate cash premium to our shareholders, the combination will create a company with a stronger balance sheet and will enhance our ability to accelerate our transformation and serve our client base,” he stated.
The deal is subject to shareholder and regulatory approval, and is expected to be finalised by the end of the year.
One industry observer commented: “The HH deal with Blackstone was ‘the one’ – it gave them the money and the direction for a buy strategy. For it to work Blackstone needs them to at least double in three-to-four years, so go and acquire. It makes the business more global, too. It’s all about EBITDA as a wise owl once told me!”