Hennessy Capital Acquisition Corp. II (NASDAQ: HCAC, HCACU, HCACW) and Daseke, Inc. announced they have entered into a definitive merger agreement. This proposed transaction will allow Daseke to become a Nasdaq-listed public company.
Daseke is a leading consolidator of the open deck freight market in North America. Since being founded in 2009, Daseke has grown revenue both organically and through mergers from $30 million to $679 million in 2015, representing a compound annual growth rate of 68%. Daseke's family of companies has become what it believes to be the largest owner of open deck equipment and the second largest open deck transportation and logistics solutions company in North America. Being a public company will allow Daseke to 1) add more outstanding companies to the Daseke family, building what it believes to be the premier open-deck trucking company in North America, 2) provide stock ownership plans for all employees and 3) support organic growth and to ensure one of the most modern, efficient and safest fleets in the industry.
"HCAC is extremely pleased to partner with Daseke's management team to oversee the continued growth of the company through access to the capital markets," said Daniel J. Hennessy, Chairman and CEO of HCAC. "Daseke is an ideal target for our investment vehicle, which is focused exclusively on best-in-class, industrial growth companies. We believe our business combination with the Daseke Team of Teams will benefit all shareholders and enable the company to accelerate its consolidation of the open deck freight sector."
Daseke will continue to be led by current Chairman, President and CEO Don Daseke, who stated, "We are excited to have HCAC join our Daseke family as we become a Nasdaq-listed public company. HCAC shares our philosophy of investing in people. We believe this formidable combination will enable us to continue to add more outstanding open deck companies to the Daseke family. We are the largest owner and operator focused on this very fragmented, $133 billion a year, open deck transportation market, of which we believe we have less than 1% of the market share. We believe Daseke has the most experienced management team in the open deck and specialized transportation industry, and we are excited for what we see as an amazing opportunity to continue our growth through working daily to achieve operational excellence and by adding quality carriers to our family."
Transaction Details
HCAC will acquire all of the outstanding capital stock of Daseke in an all-stock merger transaction. The proposed transaction will introduce Daseke as a publicly traded company, with an anticipated initial enterprise value of approximately $702 million. In connection with the merger, HCAC will change its name to Daseke, Inc. and apply to continue to list its common stock and warrants on the NASDAQ Capital Market under the ticker symbols "DSKE" and "DSKEW," respectively.
Under the terms of the merger agreement, the aggregate consideration payable upon closing will be $626 million, consisting entirely of newly issued shares of HCAC common stock at a value of $10.00 per share, subject to certain adjustments for Daseke's cash, indebtedness, unpaid income taxes and unpaid transaction expenses and the repurchase of shares held by certain existing Daseke stockholders. The merger agreement also contains an earn-out provision through which HCAC may issue up to 15 million additional shares of HCAC common stock to existing Daseke stockholders for the achievement of specified Adjusted EBITDA targets and share price thresholds for the fiscal years ending December 31, 2017, 2018 and 2019.
HCAC has secured all the required financing to complete the proposed transaction and related refinancing, including fully committed debt and equity financings as follows:
$350.0 million in new term loan credit facilities committed by Credit Suisse and UBS Investment Bank;
$70.0 million in new asset-based revolving (ABL) credit facility committed by PNC Bank, National Association;
$65.0 million of HCAC convertible preferred stock committed to be sold in a private placement with certain investors; and
$35.0 million of HCAC common stock backstop commitments from certain investors to purchase (to the extent requested by HCAC) up to $35.0 million of shares of HCAC common stock, through open market or privately negotiated transactions, in order to backstop potential redemptions by HCAC's public stockholders.
Additional information about the proposed transaction and related financing transactions will be described in HCAC's preliminary proxy statement relating to the merger, which HCAC will file with the U.S. Securities and Exchange Commission (the "SEC").
Upon completion of the proposed transaction, HCAC Chairman and CEO Daniel J. Hennessy and President, COO and director Kevin Charlton will join the Daseke board of directors, which will consist of seven members, including Daseke Chairman and CEO Don Daseke and Executive Vice President and CFO Scott Wheeler, as well as three additional independent directors who serve on the Daseke board.
The proposed transaction is subject to customary closing conditions, including regulatory and stockholder approvals and the receipt of proceeds from the proposed debt and equity financing activities, and is expected to close promptly following HCAC's special meeting of stockholders to approve the proposed transaction. Upon consummation of the proposed transaction, it is anticipated that Daseke management will own approximately 50% of the combined company common stock (assuming redemptions of approximately 67%). The parties expect the merger will be completed in the first quarter of 2017.
HCAC was advised on the transaction by Stifel, UBS Investment Bank, Cantor Fitzgerald & Co., BMO Capital Markets and XMS Capital Partners, LLC, with Sidley Austin LLP and Ellenoff Grossman & Schole LLP as legal counsel. Daseke was advised by Cowen and Company with Vinson & Elkins LLP as legal counsel.
The description of the proposed transaction is only a summary and is qualified in its entirety by reference to the merger agreement, a copy of which will be filed by HCAC with the SEC as an exhibit to a Current Report on Form 8‐K.
About Hennessy Capital Acquisition Corp. II
Hennessy Capital Acquisition Corp. II is a blank check company founded by Daniel J. Hennessy for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The company's acquisition and value creation strategy is to identify, acquire and, after its initial business combination, build an industrial manufacturing, distribution or services business. The HCAC management team brought Blue Bird Corporation public in 2015.
