Davis + Henderson Announces Divestiture

TORONTO, March 7, 2013 /CNW/ – Davis + Henderson Corporation (TSX: DH) (“D+H”) today announced that it has entered into an agreement to divest several non-strategic business processing businesses to California based The Gores Group. Financial terms of the transaction were not disclosed, and are not considered material.

The businesses, operating in five locations across Canada, include Credit Card Services, Contact Centre Services, Benefits & Administration, and Coupon & Rebate Services, acquired as part of its acquisition of Resolve in 2009, and Real Estate Services, acquired as part of its acquisition of Filogix in 2006.  These businesses largely serve customers comprising retailers, real estate boards, and packaged goods companies, and provide services that are not considered part of D+H’s core business of serving financial institutions.

This divestiture is consistent with D+H’s focus on financial technology solutions for banks and credit unions.  While the businesses generate around $60 Million of revenue, D+H does not expect the divestiture to have a material impact on operating profits.  D+H and The Gores Group have entered into a transition services agreement in order to ensure a smooth transition for customers; management, staff and facilities related to these businesses are transitioning as part of the agreement. These businesses, and the related transition activities, will be accounted for as discontinued operations beginning during the first quarter of 2013.

“Since owning these businesses we have developed them into solid businesses that have strengthened the value to customers. We want to thank the approximately 1,400 employees working in these businesses for their dedication and what they were able to accomplish for customers,” said Gerrard Schmid, CEO of D+H.

“Over the past few years D+H has been pursuing a strategy of increasingly focusing on providing technology and technology enabled solutions to the financial services sector throughout North America, and these divestitures are consistent with that strategy.”

The transaction is expected to close in mid-April, 2013, subject to satisfaction of customary closing conditions. The proceeds of the sale will be used for further debt repayments. Origin Merchant Partners acted as the financial advisor to D+H for this transaction.

About D+H

D+H is a leading provider of secure and reliable technology solutions to North American financial institutions. With a long history as a trusted partner to banks, credit unions and other financial services providers, D+H’s solutions allow our customers to focus on serving their customers. And, as the financial services marketplace continues to evolve, so do we. D+H offers a wide spectrum of technologies and services that are designed to help financial institutions stay competitive by supporting specific areas of their business as well as overall operations. D+H’s diverse and growing portfolio includes everything from lending technologies, to loan administration services, to payment solutions including cheque and value-added membership marketing programs. In 2012, D+H rose to 35th on the FinTech 100, a ranking of the top technology providers to the global financial services industry.

Davis + Henderson Corporation is listed on the Toronto Stock Exchange under the symbol DH. Further information can be found in the disclosure documents filed by Davis + Henderson Corporation with the securities regulatory authorities, available at www.sedar.com.

About the Gores Group

The Gores Group, LLC is a global investment firm focused on acquiring controlling interests in mature and growing businesses which can benefit from the firm’s operating experience and flexible capital base. The firm combines the operational expertise and detailed due diligence capabilities of a strategic buyer with the seasoned M&A team of a traditional financial buyer. The Gores Group, which was founded in 1987 by Alec E. Gores, has become a leading investor having demonstrated over time a reliable track record of creating value in its portfolio companies alongside management.  Headquartered in Los Angeles, The Gores Group maintains offices in Boulder, CO, and London. For more information, please visit www.gores.com.

Forward Looking Statements

This press release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws (“forward-looking statements”). Statements concerning D+H’s objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of D+H are forward-looking statements. The words “believe”, “expect”, “anticipate”, “estimate”, “intend”, “may”, “will”, “would” and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to important assumptions, including the following specific assumptions: the ability of D+H to meet its revenue, EBITDA, Adjusted EBITDA and Adjusted net income targets; general industry and economic conditions; changes in D+H’s relationship with its customers and suppliers; pricing pressures and other competitive factors; the anticipated effect of acquisitions or dispositions on the financial performance of D+H; and the expected benefits arising as a result of the acquisitions or dispositions. D+H has also made certain macroeconomic and general industry assumptions in the preparation of such forward-looking statements. While D+H considers these factors and assumptions to be reasonable based on information currently available, there can be no assurance that actual results will be consistent with these forward-looking statements.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Business, or developments in D+H’s industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements.

Risks related to forward-looking statements include, among other things, failure of the parties to satisfy the applicable closing conditions, challenges presented by declines in the use of personal and business cheques; D+H’s dependence on a limited number of large financial institution customers and dependence on their acceptance of new programs; strategic initiatives being undertaken to meet the D+H’s financial objective; stability and growth in the real estate, mortgage and lending markets; increased pricing pressures and increased competition which could lead to loss of contracts or reduced margins; as well as general market conditions, including economic and interest rate dynamics. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The documents incorporated by reference herein also identify additional factors that could affect the operating results and performance of D+H. Forward-looking statements are based on management’s current plans, estimates, projections, beliefs and opinions, and D+H does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change except as required by applicable securities laws.

All of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, D+H.

SOURCE: Davis + Henderson Corporation