CPE News (1/28/2019) – Descartes Systems Group (TSX: DSG; NASDAQ: DSGX) has entered into a definitive agreement to acquire the businesses run by the Management Systems Resources Inc. group of companies operating under the names “Visual Compliance”, “eCustoms”, and “MSR” (Visual Compliance) for $330 million including working capital acquired.
Visual Compliance provides software solutions and services to automate customs, trade and fiscal compliance processes, with a focus on denied and restricted party screening processes and export licensing.
Founded by Rajiv Manucha, Visual Compliance has approximately 100 employees primarily based out of Toronto with a supporting office in Buffalo, New York.
photo credit: Buffalo and Fort Erie Public Bridge Authority
Descartes To Acquire Visual Compliance / eCustoms Business
Strengthens Denied Party Screening Footprint for Global Logistics Network Customers and Partners
WATERLOO, Ontario, Jan. 28, 2019 (GLOBE NEWSWIRE) — Descartes Systems Group (TSX:DSG) (Nasdaq:DSGX), the global leader in uniting logistics-intensive businesses in commerce, announced that it has signed a definitive agreement to acquire the businesses run by the Management Systems Resources Inc. group of companies operating under the names “Visual Compliance,” “eCustoms” and “MSR” (collectively, “Visual Compliance”).
Visual Compliance provides software solutions and services to automate customs, trade and fiscal compliance processes, with a focus on denied and restricted party screening processes and export licensing. Visual Compliance is based in Canada and serves over 2,000 customers with over 67,500 subscribers operating in over 100 countries.
Denied/restricted party screening is the review of people, goods, services and/or commodities against comprehensive lists published by governments and international organizations identifying people, organizations and countries with whom it is illegal or restricted to transact business. In the international trade context, compliance with these sanction lists is actively enforced by governments around the world, with consequences including large fines, revocation of export privileges and/or criminal prosecution. Descartes and Visual Compliance provide data, content and solutions to customers and partners, like SAP and Oracle, to enable comprehensive global trade compliance reviews to be completed.
“The penalties for doing business with sanctioned parties can be far reaching and severe,” said Ken Wood, EVP Product Management at Descartes. “By adding Visual Compliance’s solutions and domain expertise to our existing Descartes MK Data denied parties screening business and Global Logistics Network, we’re in an even stronger position to help our customers navigate the trade compliance landscape while managing the full lifecycle of their shipments.”
“Trade compliance is a critical issue for our Global Logistics Network customers and our United by Design partners. This is especially so in the current environment where trade agreements are being re-negotiated, tariffs and duties are changing at a rapid pace, and sanctions on restricted or denied parties are being increasingly enforced,” said Edward J. Ryan, Descartes’ CEO. “We’ve had tremendous historical success in combining with higher-margin trade data content businesses, like Visual Compliance, to help our partners and customers better manage the increasing complexities of international trade. We’re very excited to add Visual Compliance to the Global Logistics Network and further strengthen the value we can bring to our customers and partners.”
Visual Compliance Transaction Details
Descartes has agreed to acquire Visual Compliance for approximately CAD $330 million (approximately US $250 million), including working capital acquired. The transaction is structured as a combination of asset and share purchases. Descartes will partially satisfy the purchase price by issuing approximately CAD $12 million (approximately US $9 million) in Descartes common shares to individuals receiving proceeds from the transaction including members of management, with the exact number of shares to be determined at closing using the weighted average closing price of Descartes’ shares for a period before the closing date. The balance of the purchase price (approximately CAD $318 million or approximately US $241 million) will be satisfied in cash, primarily drawn from Descartes’ amended and expanded revolving credit facility (described below). The transaction is expected to close in February and is subject to customary closing conditions, including stock exchange approval for the issuance of shares.
Amended and Increased Revolving Credit Facility
Descartes has amended and increased its existing US $150 million senior secured revolving credit facility. The new amended increased facility, with BMO as sole lead and arranger, consists of a US $350 million revolving operating credit facility to be available for general corporate purposes, including the financing of ongoing working capital needs and acquisitions, including the Visual Compliance transaction. With the approval of the lenders, the credit facility can be further expanded to a total of US $500 million. The credit facility has a five-year maturity with no fixed repayment dates prior to the end of the five-year term ending in January 2024. Borrowings under the credit facility are secured by a first charge over substantially all of Descartes’ assets.
Conference Call to Discuss Visual Compliance Acquisition
Members of Descartes’ executive management team will host a conference call to discuss the Visual Compliance transaction today at 8:30 a.m. ET, Monday, January 28, 2019. Designated numbers are 1 888 465-5079 for North America and +1 416 216-4169 for international, using Passcode 6556259#.
The company will simultaneously conduct an audio webcast on the Descartes Web site at www.descartes.com/descartes/investor-relations. Phone conference dial-in or webcast log-in is required approximately 10 minutes beforehand.
Replays of the conference call will be available following the call from 11.30 a.m. ET, and until February 4, 2019, by dialing +1 888 843-7419 or +1 630 652-3042 followed by Passcode 6556259#. An archived replay of the webcast will be available at www.descartes.com/descartes/investor-relations.
About Visual Compliance
Visual Compliance has operated since 1983. Visual Compliance has approximately 100 employees primarily based out of Toronto, Ontario, with a supporting office in Buffalo, New York. Visual Compliance’s revenues for the fiscal year ended April 2018 were approximately CAD $40 million. Visual Compliance’s average revenue growth rate over the past 4 years has been approximately 10%. More details on Visual Compliance can be found at www.visualcompliance.com.
About Descartes Systems Group
Descartes (Nasdaq:DSGX) (TSX:DSG) is the global leader in providing on-demand, software-as-a-service solutions focused on improving the productivity, performance and security of logistics-intensive businesses. Customers use our modular, software-as-a-service solutions to route, schedule, track and measure delivery resources; plan, allocate and execute shipments; rate, audit and pay transportation invoices; access global trade data; file customs and security documents for imports and exports; and complete numerous other logistics processes by participating in the world’s largest, collaborative multimodal logistics community. Our headquarters are in Waterloo, Ontario, Canada and we have offices and partners around the world. Learn more at www.descartes.com.
Global Media Contact
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