H. Wayne Huizenga, Steve Berrard Re-Enter Public Markets to Rapidly Expand Nationwide Business Service Company - Combined Company will be Capitalized to Enhance Platform Expansion, Broaden Line of Hygiene, Chemical and Facility Service Solutions >>
TORONTO and CHARLOTTE, NC, Aug. 18 /CNW/ - CoolBrands International Inc. ("CoolBrands") (TSX: COB - News) announced today that it has entered into an agreement to merge with Swisher International, Inc. ("Swisher"), a leading full-service hygiene solutions provider based in Charlotte, North Carolina. The transaction will include a court-approved plan of arrangement, will be subject to shareholder approval, and is expected to close by November 30, 2010. The merger marks the return to the public capital markets of H. Wayne Huizenga and Steve Berrard. Mr. Huizenga will serve as Chairman of the Board of Directors of the combined company, and Mr. Berrard, who will also serve as a board member, will serve as the company's Chief Executive Officer.
Swisher represents the latest partnership created by Mr. Huizenga and Mr. Berrard seeking to build a national business services brand that capitalizes on growing commercial hygiene market needs, significant expansion opportunities and a scalable delivery platform. Mr. Huizenga found his earliest success with the public offering of Fortune 500 company Waste Management, Inc. in 1972. Over the past 25 years, the two entrepreneurs have built a number of successful, highly-recognized Fortune 500 enterprises, including Blockbuster Entertainment, where they created the industry leader and sold the business for US$8.4 billion in 1994, AutoNation, where they created the industry leader and named "Fastest Growing Company in America" by Fortune magazine in 1998, and Republic Services, where they developed a leading provider of services in the domestic, non-hazardous solid waste industry.
"I am very excited to be returning to the public arena in order to further develop Swisher as a major provider of warewash, laundry, cleaning chemical and facility service solutions for the foodservice, healthcare, retail and industrial sectors," said Mr. Huizenga. "Swisher is a route-based, recurring revenue business that has many of the same attributes of companies we built over our careers."
"We have been reviewing many opportunities for the past couple of years, looking for the right one to pursue," said Michael Serruya, President and Chief Executive Officer of CoolBrands. "With the clear growth potential of Swisher, and with Wayne and Steve on board bringing their established expertise and track record in developing successful enterprises that reward shareholders, I am confident that we have found the right opportunity for our shareholders that will provide long-term value."
"Over the past few years, we have built the foundation and infrastructure at Swisher through significant investments in new management systems and expanded product lines, and we believe now is the time to take advantage of this scalable platform to fuel future growth," said Mr. Berrard. "As we look at the hygiene, chemical and facility service sectors both in North America and overseas, we see tremendous opportunities for further organic growth as well as strategic acquisitions to further leverage our platform. By joining with CoolBrands and leveraging its status as a public company and its strong financial liquidity, we will be able to act decisively and quickly to realize Swisher's potential."
"We have known Michael and Aaron Serruya for some time, and CoolBrands provides us with the perfect opportunity to bring Swisher into the public realm and help firmly establish its national footprint," said Mr. Berrard. "Wayne and I are thrilled to be working with the Serruyas, who bring extensive experience in international franchise development to the combined company. We will work together with the Serruyas to take advantage of the numerous opportunities for new growth."
Swisher was founded in 1986 to deliver manual restroom cleaning and sanitizing services to restaurants, retailers, institutions and other businesses. After significant national and international expansion that saw the Swisher name grow into a highly recognizable brand among target industries, the company was purchased by Wayne Huizenga and Steve Berrard in 2004. Under their guidance, Swisher's set of offerings grew considerably beyond manual hygiene. Today, Swisher is North America's only true full-service provider of hygiene, cleaning and facility service solutions. The business model seeks to generate recurring revenue through the ongoing delivery of these solutions through its company-owned facilities, franchises and distributor partners. Swisher has 66 offices throughout North America, with 15 franchises located in North America and 10 master licensees operating internationally.
"Our financial results represent the substantial investments we have made in Swisher's platform. Since we acquired Swisher we have invested over US$60 million in equity in our service delivery platform by repurchasing 90% of U.S. franchisees, developing superior management systems, adding transportation and facility resources, assembling an outstanding management team and expanding the product lines. While these were costly efforts and resulted in cumulative operating losses, we now have the infrastructure to rapidly scale our business in the future," concluded Mr. Berrard. In 2009, Swisher generated system-wide revenue of US$112.1 million, total revenue from company operations of US$56.8 million and a loss before interest, taxes, depreciation and amortization of US$2.1 million.
Summary of the Transaction
On August 17, 2010, CoolBrands and Swisher entered into a merger agreement setting out, among other things, the terms under which the proposed merger transaction will be undertaken. Under the transaction, all of the outstanding common shares of Swisher will be exchanged for 57,789,630 CoolBrands common shares of which 55,789,630 will be subject to lock-up agreements whereby such shares cannot be sold or transferred for the period ending upon the earlier of (i) the public release of combined company's earnings for fiscal year 2011 or (ii) March 31, 2012 (subject to certain exceptions). Following the completion of the transaction, the current CoolBrands shareholders will hold approximately 52% of the merged company, while current shareholders of Swisher (primarily Mr. Huizenga, Mr. Berrard and their group) will hold approximately 48%.
The transaction will include a court-approved plan of arrangement and will require the approval of at least 66 2/3 % of the votes cast by the shareholders of CoolBrands at a special meeting of CoolBrands' shareholders expected to take place by mid-November 2010. In addition to shareholder and court approvals, the transaction is subject to applicable regulatory approvals and the satisfaction of certain other closing conditions customary in transactions of this nature.
The transaction has been unanimously approved by the board of directors of CoolBrands. The board of directors of CoolBrands is expected to provide a written recommendation that holders of CoolBrands common shares vote in favour of the transaction in the information circular to be mailed in connection with the special meeting of shareholders. Clarus Securities Inc. has provided an opinion to the CoolBrands board of directors that the consideration to be paid by CoolBrands under the transaction is fair, from a financial point of view, to the holders of CoolBrands common shares. CoolBrands' legal counsel is Stikeman Elliott LLP and Swisher's financial advisors are Broadband Capital Management and its legal counsel is Akerman Senterfitt and Osler, Hoskin & Harcourt LLP.
Each of Michael and Aaron Serruya have entered into voting agreements with CoolBrands and Swisher and have agreed to vote in favour of the transaction at the special meeting of CoolBrands shareholders to be held to consider the transaction.
The merger agreement provides that the board of directors of CoolBrands may, under certain circumstances, terminate the agreement in favour of an unsolicited superior proposal, subject to payment of a termination payment of $1.2 million to Swisher.
Further information regarding the transaction will be contained in an information circular that CoolBrands will prepare, file and mail in due course to their shareholders in connection with the special meeting to be held to consider the transaction. All shareholders are urged to read the information circular once it becomes available as it will contain additional important information concerning the transaction.
Details regarding these and other terms of the transaction are set out in the merger agreement, which will be available on SEDAR at www.sedar.com. |
