J2 Global, Inc. (NASDAQ: JCOM), a leading internet information
and services company, today announced its plan to separate the
company into two independent publicly traded companies – J2 Global
and Consensus – through a spin-off of at least 80.1% of the
outstanding shares of Consensus common stock to J2 shareholders.
The separation is expected to be completed in the third quarter of
2021. Upon completion of the transaction, shareholders will own two
category-leading independent public companies, each well positioned
for long-term success and superior value creation. J2 will host a
live audio webcast and conference call led by members of the
management team to discuss the transaction on April 20, 2021, at
8:30 a.m. Eastern Time (details below).
J2 Global
J2 will continue its strategy of building a leading internet
platform focused on key verticals, including technology &
gaming, shopping, health, cybersecurity and SMB. J2 provides
trusted content and applications; has a leading programmatic
acquisition system; and an established track record of growth. Pro
forma for the transaction, J2 is expected to have revenue of
between $1.297-$1.334 billion in 2021 (per prior guidance) and a
run-rate Adjusted EBITDA margin of approximately 35%1. At the
closing of the transaction, J2 is expected to have moderate
leverage, providing the financial flexibility to support its growth
with organic investment and M&A.
Consensus
Consensus intends to leverage its position as a leading provider
of secure data exchange, focused primarily on the healthcare
sector, to create an end-to-end solution addressing healthcare
interoperability. The business will primarily comprise the Cloud
Fax business that is currently part of the Cloud Services division
of the company. The Cloud Fax business that Consensus will own is
embedded in the healthcare ecosystem and is well positioned to
capitalize on the large and growing market opportunity to provide
interoperability among disparate systems and workflows, thereby
increasing worker productivity, reducing costs, and delivering
better patient care. Pro forma for the transaction, Consensus is
expected to have revenue of between $333-$342 million in 2021 (per
prior guidance) and a run-rate Adjusted EBITDA margin of
approximately 55%1. Its financial strategy will be to deploy its
strong free cash flow in support of its organic investment plans
and de-levering.
Vivek Shah will remain Chief Executive Officer of J2, while
Scott Turicchi, J2’s current President & Chief Financial
Officer, will become the Chief Executive Officer of Consensus.
Vivek Shah stated: “This is an exciting day for J2’s employees,
shareholders, customers, and other key stakeholders. This
transaction will create two leading independent public companies.
With distinct management teams, capital structures, and strategic
focus, each company should be very well positioned to create
enduring value. I am also very pleased that Scott Turicchi, my
long-term partner at J2, will become the CEO of Consensus at the
closing of the transaction.”
Scott Turicchi stated: “Today marks an important milestone that
underscores the value we are creating in our Cloud Fax business. In
recent years, we have seen an acceleration in growth and
opportunity for our secure data exchange business, which is now
positioned to be a leader in the race to address healthcare
interoperability. Along with my colleagues at Consensus, I am
excited for this next chapter and look forward to our future
success.”
Transaction Details
J2 intends to distribute at least 80.1% of the outstanding
Consensus shares to J2 shareholders on a pro rata basis in a
distribution intended to be tax-free to J2 and its shareholders. At
the time of the spin-off, J2 intends to retain up to a 19.9%
interest in Consensus and divest that interest over time in a
tax-efficient manner.
Completion of the spin-off will not require a shareholder vote
but will be subject to customary closing conditions, including
final approval by J2’s Board of Directors, receipt of a private
letter ruling from the Internal Revenue Service addressing certain
aspects of the spin-off, a tax opinion, and the effectiveness of a
Form 10 registration statement with the U.S. Securities and
Exchange Commission. No assurances can be made that the transaction
will occur, regarding the form that the transaction may take or the
specific terms or timing of the spin-off.
Advisors
Citi is acting as exclusive financial advisor and Gibson, Dunn
& Crutcher LLP is acting as legal advisor to J2.
Webcast and Conference Call
J2 will host a live audio webcast and conference call led by
members of the management team to discuss the transaction on April
20, 2021, at 8:30 a.m. Eastern Time. Members of the public, the
press, the financial community, stockholders and other interested
parties are invited to join via webcast at www.j2global.com or via
telephone by dialing (844) 985-2014 (U.S.) or (973) 528-0116
(International). In addition, the call will be available by
webcast, accessible through the J2’s Investor Relations page at
http://investor.j2global.com/. The webcast will be archived for
playback on that same site. Questions for the conference call will
be taken via email at investor@j2.com and can be sent any time
prior to or during the Webcast. Materials presented during the call
will be posted on the Company's web site at www.j2global.com and
furnished as an exhibit to the Company’s 8-K filed with the
Securities and Exchange Commission pursuant to Regulation FD in
connection with J2's announcement.
About J2 Global®
J2 Global, Inc. (NASDAQ: JCOM) is a leading internet information
and services company consisting of a portfolio of brands including
IGN, Mashable, Humble Bundle, Speedtest, PCMag, RetailMeNot,
Offers.com, Spiceworks, Everyday Health, BabyCenter and What To
Expect in its Digital Media business and eFax, eVoice, iContact,
Campaigner, Vipre, and IPVanish in its Cloud Services business. J2
reaches more than 240 million people per month across its brands.
As of December 31, 2020, J2 had achieved 25 consecutive fiscal
years of revenue growth. For more information about J2, please
visit www.j2global.com.
Not an Offer
This announcement does not constitute or form part of an offer
to sell or the solicitation of an offer to sell or the solicitation
of an offer to buy any securities.
Non-GAAP Financial Measures
Adjusted EBITDA is defined as earnings before interest; gain on
sale of businesses; loss on investments, net; other (income)
expense, net; income tax expense (benefit); net loss in earnings of
equity method investments; depreciation and amortization;
share-based compensation; certain acquisition-related integration
costs; amortization of certain patents and intangible assets;
change in value on investment; additional tax expense/benefit from
prior years; gain on sale of assets; intra-entity transfers; lease
asset impairments and other charges; leasehold improvement
impairments; and certain other unusual or non-recurring items.
Adjusted EBITDA margin is defined as Adjusted EBITDA divided by
revenue.
We have not reconciled the ranges of 2021 pro forma Adjusted
EBITDA for J2 or Consensus included in this release to the most
directly comparable GAAP measures because this cannot be done
without unreasonable effort due to the variability with respect to
costs related to the transaction, standalone expenses, and the
assumption of previously unallocated overhead costs, which are
potential adjustments to 2021 pro forma earnings. We expect the
variability of these items to have a potentially unpredictable and
significant impact on the future GAAP financial results of J2 and
Consensus.
“Safe Harbor” Statement Under the Private Securities
Litigation Reform Act of 1995
Certain statements in this Press Release are “forward-looking
statements” within the meaning of The Private Securities Litigation
Reform Act of 1995 with respect to the proposed spin-off
transaction. These forward-looking statements are subject to
numerous assumptions, risks and uncertainties, including market and
other conditions and include uncertainties regarding expected
operating performance and financial position of the companies after
a transaction, whether the transaction can be completed with the
proposed form, terms or timing, or at all, the costs and expected
benefits of the proposed transaction, and the expected tax
treatment of the transaction. There are important factors that
could cause our actual results, level of activity, performance or
achievements to differ materially from the results, level of
activity, performance or achievements expressed or implied by the
forward-looking statements, including those factors described in J2
Global’s Annual Report on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K and other documents filed from
time to time by J2 Global with the SEC. Although management’s
expectations may change after the date of this press release, J2
Global undertakes no obligation to revise or update these
statements.
_______________________________
1 We are not able to estimate pro forma net income on a
forward-looking basis without unreasonable efforts due to the
variability and complexity with respect to the charges excluded
from these non-GAAP measures; in particular, the variability with
respect to costs related to the transaction, standalone expenses,
and the assumption of previously unallocated overhead costs.
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version on businesswire.com: https://www.businesswire.com/news/home/20210419005841/en/
Scott Turicchi (800) 577-1790 J2 Global, Inc.
investor@j2.com
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