Speed Commerce Acquires E-Commerce Services Provider Fifth Gear, Total Value ~$55M

Speed Commerce, Inc. SPDC, a leading provider of omni-channel e-commerce services, has completed the acquisition of Fifth Gear, a single-source provider of order management, fulfillment and customer care services. Total consideration included $55 million in cash paid at closing with an additional contingent payment to be made in the form of common shares of Speed Commerce stock, if earned. The transaction provides Speed Commerce with a diverse list of marquee clients on long-term contracts, adds substantial fulfillment services assets, and solidifies the company's position as one of the fastest growing providers of end-to-end e-commerce services. Clients added as a result of the transaction include, among others, Burger King, Lens.com, Smithsonian Institute, Zeeberry.com and popular pet specialty companies, Dog.com, Horse.com and Petbox. For the 12 months ended September 30, 2014, Fifth Gear's net revenue exceeded $50 million. "The purchase of Fifth Gear provides meaningful scale and value to Speed Commerce on all levels," said Richard Willis, president and CEO of Speed Commerce. "Our company is now better positioned to deliver on our vision of becoming one of the largest full service e-commerce players in the industry. We are excited about the opportunity to win new accounts and cross-sell our services to existing clients, as well as leverage our newly-acquired capabilities to communicate a unique service offering and further strengthen our brand. Additionally, our sales team now has additional fulfillment expertise and resources to support our aggressive pursuit of a newly-enhanced pipeline of client opportunities." "We welcome the Fifth Gear team to our combined organization and look forward to working towards the realization of the clear and ample synergies and opportunities that motivated this transaction," continued Willis. "We have been impressed with the talented personnel that have been added to our team through this transaction, and together we look forward to continuing to provide high levels of service to our new and long-standing clients." Al Langsenkamp, chairman and CEO of Fifth Gear, commented: "Becoming a part of Speed Commerce represents an important strategic step in our go-to-market offering. We believe that Speed's fully integrated e-commerce services platform, combined with Fifth Gear's unique capabilities, will allow our combined company to better serve clients and help them deliver a more seamless online shopping experience. Our team's mission is all about fulfilling the quality 'brand promise' that our clients make to their customers every day. Speed Commerce shares this mission and we look forward to driving value for our clients." As a result of the acquisition, the organic growth of existing clients and the addition of new client opportunities, the company expects revenues for its fiscal year ending March 31, 2016 ranging between $180 million to $220 million. The company anticipates Adjusted EBITDA margins for fiscal 2016 in the range of 10%-13%, a wide range due to: (a) the timing of the realization of anticipated synergies and cost savings, (b) the impact of additional investments in sales, marketing and technology discussed during its most recent earnings call, and (c) results from the upcoming holiday season, which is still in the early stages. The company anticipates that the acquisition will become accretive to earnings during fiscal 2016. Speed Commerce financed the acquisition and refinanced its existing term loan facility with a new $100 million credit facility led by Garrison Capital. Stifel acted as exclusive financial advisor in connection with this credit facility. Lake Street Capital Markets served as financial advisor to the company in connection with the acquisition of Fifth Gear and originated that transaction.