Photographer: Chuanchai Pundej / EyeEm / Getty Images
Photographer: Chuanchai Pundej / EyeEm / Getty Images
Thoma Bravo’s blank check firm reached agreement to acquire application software company IronSource went public through a merger that values the combined business at $ 11.1 billion.
Thoma Bravo Advantage, a special purpose acquisition company, or SPAC, will help finance the business with $ 1.3 billion in new investments from a group of top-tier asset managers, including Tiger Global Management, Wellington Management and Seth Klarman’s Baupost Group, according to a statement on Sunday, confirming a Bloomberg News report.
Under the terms of the agreement, ironSource’s shareholders will receive $ 10 billion, including $ 1.5 billion in cash and the majority of the company’s shares combined. IronSource is expected to have $ 740 million in cash upon completion.
Orlando Bravo, founder and managing partner of Thoma Bravo, the private equity giant behind SPAC, will serve on the board of ironSource.
“As one of the fastest growing and most innovative platforms for building and expanding business in the application economy, ironSource is well positioned for continued success as a public company,” said Bravo in demonstration.
ironSource is unusual amid the recent wave of SPAC targets, as it is already profitable; the company had earnings before interest, taxes, depreciation and amortization of $ 104 million in 2020, according to the statement.
The Tel Aviv-based company was founded by eight founders in 2010 and provides software used by application developers and telecom operators. All founders are expected to remain after the deal with Thoma Bravo Advantage and will own shares with a higher voting right, which gives them a five-to-one ratio, according to people familiar with the matter, who requested anonymity because of the details are not public. .
Trading Structure
The business structure is consistent with Thoma Bravo’s private equity model.
Under Bravo, the company has built a reputation for purchasing cloud software companies, maintaining existing management in place and supporting it in a more similar way to venture capital. It is a lightweight model that goes against the traditional private equity wisdom of financial engineering to provide better returns.
IronSource was in the advanced stages of its initial public offering roadshow when its chief executive and co-founder, Tomer Bar Zeev, was introduced to Bravo in early February, people said. The two decided to pursue the deal, leaving ironSource to abandon its IPO plans and Thoma Bravo Advantage for further discussions with other potential SPAC targets.
“Despite our previous progress in the search for a traditional IPO, when we met with Thoma Bravo Advantage, we found an alignment of shared vision and conviction about the long-term growth that we can drive at ironSource, which made it the perfect partner as we take this next step in the growth of our company, ”said Zeev in the statement.
In 2019, funds managed by CVC Capital Partners acquired a minority stake in ironSource for more than $ 400 million.
Thoma Bravo Advantage raised $ 1 billion in an initial public offering in January. Bravo is the president of SPAC and Robert “Tre” Sayle is the CEO.
This month, the private equity firm announced a $ 2.4 billion deal to take integration and data integrity company Talend SA is private and is close to a $ 3.7 billion acquisition of financial software company Calypso Technology, Bloomberg News reported.
The agreement with ironSource is expected to be closed in the second quarter. Goldman Sachs Group Inc., Jefferies Financial Group Inc. and Citigroup Inc. advised ironSource in the transaction.
(Updates with the comment from the CEO of ironSource in the 11th paragraph.)