Grid Dynamics International, Inc. (“Grid Dynamics”), a leader in driving enterprise-level digital transformation, announced that it has entered into a definitive merger agreement with ChaSerg Technology Acquisition Corp. (Nasdaq: CTAC) (“ChaSerg”), a special purpose acquisition company led by Chief Executive Officer Lloyd Carney and President and Chief Financial Officer Eric Benhamou. Upon completion of the combination, Grid Dynamics will become a Nasdaq-listed public company, with an anticipated initial equity market capitalization of approximately $515 million based on a stock price of $10.00 per share. Immediately upon consummation of the transaction, ChaSerg will change its name to “Grid Dynamics Holdings, Inc.”
Grid Dynamics Investment Highlights:• Leader in driving enterprise-level digital transformation for Fortune 1000 companies
• Large and rapidly growing market opportunity estimated to exceed $750 billion by 2025, with current addressable market in excess of $100 billion
• Strong technical expertise in the rapidly growing fields of artificial intelligence (AI), data science, cloud computing, microservices, and DevOps
• Stable and predictable business model driven by high value, high impact services and a proven track-record of growth with existing and new customers
• Demonstrated ability to attract, train, and retain top-digital engineers
• Globally integrated delivery model leveraging close collaboration with clients and optimized staffing to ensure superior client ROI and an efficient cost structure • Proven platform with multiple avenues for continued growth
• Compelling financial profile:
Estimated 2019 revenue of $116-$117 million and adjusted non-GAAP EBITDA of $23.6- $24.3 million
2015 – 2019E organic revenue CAGR of ~30%, and 20%+ adjusted non-GAAP EBITDA margin
Superior 2018 revenue per employee of $93,000 per year, approximately 50% higher than publicly traded peers including EPAM Systems, Endava PLC and Globant SA.
Demonstrated growth and retention of top accounts resulting in an expected two and a half times increase in spend of top 10 clients over the past 5 years
• Highly experienced and cohesive management team led by Leonard Livschitz, CEO of Grid Dynamics
Lloyd Carney, CEO of ChaSerg, stated, “After a thorough search process, in which we conducted a comprehensive analysis of multiple potential business combinations, Grid Dynamics stood above the rest as an ideal partner that we believe could deliver the best long-term shareholder value. Leonard and the entire management team have built a truly impressive organization, establishing Grid Dynamics as a market leading provider of digital transformation services. Their impressive blue-chip client base and the number of long-standing and growing relationships they have nurtured is a testament to their leading capabilities, unique delivery model, and client-centric culture underpinned by an employee base of leading digital engineers. Furthermore, Grid Dynamics’ attractive financial profile and multiple avenues for growth in a rapidly expanding market give us great confidence in their long-term growth strategy.”
Mr. Carney continued, “With an implied initial enterprise value of approximately 13 times Grid Dynamics’ estimated 2020 adjusted non-GAAP EBITDA, we view this transaction as attractive when compared with the company’s publicly traded peers, which currently trade at an average 2020 EV/EBITDA multiple of approximately 22 times. We are thrilled to help facilitate Grid Dynamics’ listing on the Nasdaq, and excited to partner with Leonard and the rest of the team as they continue to grow as a public company.”
Leonard Livschitz, CEO of Grid Dynamics, stated, “Today’s announcement marks the beginning of an exciting new chapter in our company’s history. The digital economy is profoundly changing the way we access information, goods and services, and as a result, challenging how businesses are currently structured and how their business models function. As a result, virtually every major enterprise across every industry is exploring digital transformation to remain competitive. At Grid Dynamics, our focus has always been exclusively on enabling our clients’ digital transformation journeys through technology consulting and high quality engineering, with the goal of helping our clients achieve their most critical business objectives. We are thrilled to be entering into this transaction with ChaSerg to become a publicly traded company. With access to new sources of capital and liquidity, Grid Dynamics will be able to address our client’s need better than ever before, and I am honored to be leading our organization as we continue to grow.”
Following the completion of the business combination, the combined company will continue to be led by Leonard Livschitz, CEO of Grid Dynamics. In addition, Lloyd Carney and Eric Benhamou will join Grid Dynamics’ Board of Directors.
Summary of Transaction
Under the terms of the proposed transaction, the business combination will be effected through a merger pursuant to which Grid Dynamics will be acquired by a subsidiary of ChaSerg and become a publicly traded entity under the name “Grid Dynamics Holdings, Inc.”
Assuming no redemptions by the public stockholders of ChaSerg, the balance of the approximately $224 million in cash held in ChaSerg’s trust account will be used to pay the existing Grid Dynamics shareholders cash consideration of $130 million. The remainder of the consideration payable to the existing Grid Dynamics shareholders will consist of approximately 25.5 million shares of ChaSerg common stock. In addition, Grid Dynamics is expected to add approximately $80 million of cash at close, net of transaction expenses and fees, which may be used for acquisitions or other strategic priorities.
The transaction has been unanimously approved by the boards of directors of both Grid Dynamics and ChaSerg. Completion of the transaction is subject to approval by stockholders and certain other conditions. The transaction is expected to close in the first quarter of 2020.
Additional information about the business combination will be provided in a preliminary proxy statement to be filed with the Securities and Exchange Commission, and will be available at the SEC website at www.sec.gov.
Cantor Fitzgerald and William Blair are acting as capital markets advisors to ChaSerg. Latham & Watkins LLP and Ellenoff, Grossman and Schole are serving as legal counsel to ChaSerg. Covington Associates LLC is acting as financial advisor to Grid Dynamics. Wilson Sonsini Goodrich & Rosati, P.C. are acting as legal counsel to Grid Dynamics. Reed Smith Richards Butler, LLP is serving as legal counsel to Automated Systems Holdings Limited.
About Grid Dynamics
Grid Dynamics is a leader in driving enterprise-level digital transformation services for Fortune 1000 corporations. We work in close collaboration with our clients on digital transformation initiatives that span strategy consulting, early prototypes and enterprise-scale delivery of new digital platforms. We help organizations become more agile and create innovative digital products and experiences using deep expertise in emerging technology, top global engineering talent, lean software development practices, and a high-performance product culture. Our secret sauce is in applying emergent technologies such as artificial intelligence, data science, cloud computing, Big Data and DevOps to enable digital transformation across the enterprise. Headquartered in the San Francisco Bay Area with over a thousand technologists located in engineering delivery centers throughout the US, Central and Eastern Europe, Grid Dynamics is known for architecting and delivering some of the largest digital transformation programs in the retail, technology and financial sectors to help its clients win market share, shorten time to market and reduce costs of digital operations on a massive scale.
About ChaSerg
ChaSerg Technology Acquisition Corp. is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. While our efforts to identify a target business may span many industries and regions around the world, we intend to focus our search for prospects within the technology industry. ChaSerg is led by Chief Executive Officer Lloyd Carney and President and Chief Financial Officer Eric Benhamou.
