GS Acquisition Holdings (GSAH), announced this morning that they have signed a definitive agreement to combine with Vertiv Holdings LLC, a Platinum Equity portfolio company, and a global provider of critical digital infrastructure and continuity solutions. David Cote, CEO of GSAH, will serve as Executive Chairman of Vertiv, and Vertiv’s existing management team will continue to be led by 30-year industry veteran CEO Rob Johnson.

The transaction is expected to close in the first quarter of 2020, and at close Vertiv’s stock will trade under the ticker symbol NYSE: VRT.  Additionally, Vertiv will have an anticipated pro forma enterprise value of approximately $5.3 billion, or 8.9x the company’s estimated 2020 pro forma Adjusted EBITDA of approximately $595 million.

As for additional details on Vertiv business, they deliver “the hardware, software, analytics and ongoing services customers rely on to enable their vital applications to run continuously, perform optimally and grow with their business needs. The company’s portfolio of power, thermal and IT management along with cooling and IT infrastructure solutions and services that extend from the cloud to the edge of the network, generated nearly $4.3 billion in revenue in 2018.”

Transaction Summary

After giving effect to any redemptions, the balance of the approximately $705 million in cash held in GSAH’s trust account, together with $1.239 billion in private placement proceeds, will be used to pay $415 million cash consideration (subject to certain adjustments) to Vertiv stockholders, pay transaction expenses and reduce Vertiv’s existing indebtedness to up to 3.6x 2019 estimated pro forma Adjusted EBITDA.

Quick takes:  While we have a press release and a presentation, we still do not have a super 8-K with all of the various filed agreements, so we’re going to have to wait to get all the finer details on this transaction. But at it’s core, this is a deleveraging transaction with a lot of cash ($415 million) going to Vertiv shareholders. That $1.2 billion dollar PIPE appears to be done at $10.00, but again, without the filed agreements, we don’t know if there are any sweeteners to bring the effective cost down.  This deal should initially pop partially based on the names attached (David Cote, Goldman Sachs, Platinum Equity – Gores), but it hard to say just yet if this is a clear cut winner.  However, on the face of it, digital infrastructure is a solid industry and Vertiv stacks up well to the comps. So far, so good.  Let’s get those additional details though….

CONFERENCE CALL

Tuesday, December 10, 2019 starting at 10:30 a.m. ET

The call can be accessed by dialing 1-877-883-0383 (domestic toll-free number) or 1-412-902-6506 (international) and providing the conference ID: 8567556, or asking for the GSAH-Vertiv transaction announcement call.

The live webcast of the investor call as well as related presentation materials will be available at https://www.gsacquisition.com/.

A replay of the teleconference and webcast will also be available for approximately 30 days at https://www.gsacquisition.com/.

ADVISORS

• Goldman Sachs & Co. LLC acted as lead placement agent and exclusive financial advisor to GSAH.
• J.P. Morgan Securities LLC acted as financial advisor to Vertiv.
• Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor to GSAH.
• Morgan, Lewis & Bockius, LLP and Gibson, Dunn & Crutcher LLP acted as joint legal advisors to Platinum Equity and Vertiv.