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H.I.G. Capital's Acquisition of Converge Technology Solutions: A New Era Begins

H.I.G. Capital, a leader in alternative investments, has taken a significant step forward by acquiring Converge Technology Solutions Corp. in a pure cash transaction. This strategic move not only provides immediate liquidity to the shareholders of Converge but also paves the way for the company’s long-term growth strategy.

The terms of the acquisition specify that shareholders will receive 5.50 CAD per share in cash. This offer represents a remarkable premium of approximately 56% to 57% over the closing price and the volume-weighted average share price on the Toronto Stock Exchange (TSX) on February 6, 2025, the last trading day before the announcement. The agreement has garnered unanimous support from Converge's Board of Directors, following recommendations from an independent committee.

Details of the Acquisition

The acquisition marks a transformative period for Converge, which will be integrated into Mainline Information Systems, LLC, another H.I.G.-owned entity. Mainline, based in Tallahassee, FL, specializes in a diverse range of IT solutions, including enterprise servers, hybrid cloud, cyber storage, and network security services. By combining forces, the two companies aim to enhance their offerings and deliver a broader array of solutions to their customers.

Aaron Tolson, Managing Director at H.I.G. Capital, praised the merger, stating, "Converge is renowned for understanding IT market trends and aligning its services accordingly. Our collaboration with Mainline, which has been a trusted advisor to IT decision-makers for decades, will provide a comprehensive suite of technology and service capabilities."

This merger is poised to create substantial benefits, as both entities focus on cyber security, cloud solutions, and digital infrastructure. Greg Berard, CEO of Converge, expressed optimism about the partnership stating, "This alliance not only ensures significant value for our shareholders but also establishes a foundation for better service delivery to our customers."

Strategic Benefits for Stakeholders

With roughly 24% of outstanding shares representing supportive agreements from major stakeholders, the acquisition is set to gain further momentum. The cash transaction immediately addresses shareholders’ liquidity needs while enhancing Converge’s capabilities as a strategic partner in the evolving tech landscape.

The acquisition is projected to close in the second quarter of 2025, subject to necessary regulatory approvals and the completion of a court-approved arrangement plan under the Canada Business Corporations Act. An extraordinary general meeting will be held to secure shareholder votes, ensuring that the voices of stakeholders are heard in this pivotal move.

In preparation for the closing, Converge aims to provide preliminary results for its fourth quarter fiscal year 2024 on February 10, 2025, showcasing its performance metrics amid the transition. Analysts predict that both the gross profit and the adjusted EBITDA will fall within the previously announced ranges, hinting at a robust business trajectory leading up to the merger.

Final Thoughts

H.I.G. Capital's acquisition of Converge Technology Solutions represents a significant development in the tech industry, creating a robust entity that will meet the nuanced demands of modern businesses. This acquisition is not merely about numbers; it's a testament to a commitment to innovation and the delivery of superior technology solutions. As industry trends continue to shift, this partnership places both companies in a strategically advantageous position, with enhanced capabilities to cater to their clients’ needs.

By focusing on their combined strengths, Converge and Mainline are set to redefine the landscape of IT solutions, proving that collaboration and growth can lead to exceptional outcomes in today's competitive environment.

For more information about Converge and H.I.G. Capital, visit their respective websites and stay tuned for updates as this exciting chapter unfolds.