Granahan McCourt Acquisition (stock symbol: [t]GHN)[/t], which raised $90 million when it went public in October 2006, has announced that it reached an agreement to merger with Pro Brand International, a "designer and developer of advanced antenna and RF systems for the satellite industry."
Granahan McCourt Acquisition Corporation to Merge with Pro Brand International, Inc.
Wednesday April 30, 5:15 pm ET
Highlights
-- Designer and developer of advanced antenna and RF systems for the satellite industry
-- Initial consideration of $75.0 million includes $55 million of cash and $20 million of stock, plus earnout contingent on performance through 2010
-- Granahan McCourt team adds many years of operating and strategic experience and key relationships with companies in Europe, Latin America and Asia, strengthening growth opportunities
-- 2007 revenue, EBITDA and net income were $132.0 million, $14.6 million, and $8.7 million, respectively
-- Blue chip customer base including leading North American DBS operators
-- Multi-pronged growth strategy including further rollout of new products to existing customers, geographic expansion, expansion into related verticals, and pursuit of acquisition opportunities in fragmented market
-- Lower P/E, enterprise value to EBITDA, and enterprise value to revenue than publicly-traded comparables
NEW YORK--(BUSINESS WIRE)--Granahan McCourt Acquisition Corp. (AMEX: GHN - News, GHN.U - News, GHN.WS - News) (“Granahan McCourt”) announced today that it has entered into a definitive merger agreement with privately-held Pro Brand International, Inc. (“PBI”), a leading designer and developer of advanced antenna and RF systems for the satellite industry, primarily serving Direct Broadcast Satellite (“DBS”) operators.
PBI’s current management team will remain in place to run the business following consummation of the acquisition. Mr. David McCourt will remain Chairman of the Board of Granahan McCourt. It is anticipated that, upon consummation of the acquisition, Granahan McCourt will change its name to “Pro Brand International, Inc.”
David McCourt, President, CEO and Chairman of the Board of Granahan McCourt, stated, “PBI has built a strong business in the high-growth DBS satellite sector and is well positioned to continue to gain market share going forward. A terrific engineering design and development team with, in my view, some of the most sophisticated satellite equipment and RF design experience in the industry, combined with a proven track record in the space, creates a solid foundation to pursue meaningful growth opportunities. In addition to providing capital and a public currency, we have partnered with PBI's existing team to create a multi-pronged growth strategy for this new platform. We will be focused on executing international expansion, leveraging PBI’s design capabilities into adjacent verticals, rolling out additional products, and pursuing attractive acquisition opportunities in a fragmented industry.”
Mr. Philip Shou, Chief Executive Officer of Pro Brand, added, “We are very excited to be partnering with Granahan McCourt, as we believe their extensive operating experience, combined with the strategy we have developed over the past six months with the Granahan McCourt team, will take our company to the next level.”
Overview of the Business
Founded in 1983 and headquartered in Marietta, Georgia, PBI is a leading designer and developer of advanced antenna and RF systems for the satellite sector, primarily serving DBS providers. PBI serves operators such as DIRECTV and EchoStar’s Dish Network in the U.S., Star Choice in Canada and others in the DBS space, and its engineering team has extensive expertise in related verticals such as Very Small Aperture Terminals (“VSATs”).
PBI leverages its advanced R&D labs and in-house engineering team to design complete end-to-end solutions for satellite antenna systems. PBI and Granahan McCourt have developed a multi-pronged strategy which they believe will enhance PBI's already-strong growth. PBI expects to be able to continue to bring to market leading-edge solutions to its existing and new customers and PBI's engineering excellence, advanced facilities and existing products and expertise provide many of the capabilities needed to address adjacent and growing markets such as VSAT. In addition, PBI has focused principally on the US and anticipates that the combination with Granahan McCourt will help identify and execute key geographic expansion opportunities. This, together with opportunities for consolidation of the satellite equipment sector, which is a fragmented market, provides meaningful opportunities for further growth in revenue and net income.
Summary of the Transaction
Under the terms of the merger agreement, Granahan McCourt will acquire PBI for an aggregate purchase price of $75.0 million, of which $20.0 million will be paid in Granahan McCourt common stock, together with contingent earnout payments in 2009, 2010, and 2011 if PBI meets certain performance targets. Most of the common shares issued to PBI in connection with the transaction will be restricted from sale, hedge or pledge for up to six months following the closing pursuant to a standard lockup. Granahan McCourt will fund the acquisition with cash that is currently held in trust together with new shares to be issued.
The transaction is currently expected to close in the third or fourth quarter of 2008. The closing of the transaction is subject to customary closing conditions, including approval of the acquisition agreement by the stockholders of Granahan McCourt. In addition, the closing is conditioned on holders of less than 20% of the shares of Granahan McCourt common stock voting against the acquisition and electing to convert their Granahan McCourt common stock into cash, as permitted by the Granahan McCourt certificate of incorporation.
PBI Historical Financial Highlights and 2008 Outlook
In fiscal 2007, total revenues were $132.0 million, a 47% increase from $89.6 million in fiscal 2006. EBITDA in fiscal 2007 was $14.6 million, or 11% of revenues, a 79% increase from $8.1 million, or 9% of revenues, in fiscal 2006. Net income in 2007 was $8.7 million, an 86% increase from $4.7 million in 2006. PBI has no long term debt and no preferred stock.
Based on current business trends, total revenues in 2008 are expected to be approximately $160.0 million, EBITDA approximately $18.0 million and net income approximately $11.0 million. 2008 revenue, EBITDA and net income guidance does not include any potential acquisitions.
Conference Call Information
Granahan McCourt will host a conference call to discuss the transaction at 10:00 a.m. Eastern Time tomorrow, May 1, 2008. Investors may listen to the call via telephone by dialing (800) 762-9439 (pass code 3875558), or for international callers, (480) 629-9041. A telephone replay will be available shortly after the call and can be accessed by dialing (800) 406-7325 (pass code 3875558), or for international callers, (303) 590-3030. The replay will be available until May 15, 2008, at 11:59 p.m. Eastern Time. The audio presentation and presentation slides will be webcast live and may be accessed by visiting the GMAC section of the Granahan McCourt website at www.granahanmccourt.com.
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A two-year income statement can be found here:
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