Spire Global, Inc., a leading provider of space-based data, analytics and space services, and exactEarth Ltd. has announced that the companies have entered into a definitive arrangement agreement under which Spire will acquire exactEarth for approximately US$161.2 million (CAD$204.2 million) in cash and stock, which implies ~9.1x exactEarth’s Enterprise Value to LTM revenue. Once completed, exactEarth will become a fully owned subsidiary of Spire and continue to operate from Cambridge, Ontario, Canada under the leadership of exactEarth’s CEO Peter Mabson, reporting directly to Spire CEO Peter Platzer.
“Peter and I share a vision about the opportunity for space-based maritime data and the digitalization of the global maritime industry, and I look forward to pursuing that vision together,” said Peter Platzer, Spire’s CEO. “I have great respect for the highly experienced team at exactEarth and am excited to continue driving this digital transformation together, serving more customers with a more robust data and solutions platform.”
The combined company aims to be transformative for customers and the maritime industry. Bringing together real-time and historical space-based maritime data, Spire and exactEarth will provide customers with innovative solutions that drive the digitalization of the almost US$2 trillion global maritime industry, such as better fleet visibility for more efficient routing, cost savings from reduced fuel consumption, and a lower environmental footprint.
“We look forward to joining forces with the Spire team to not only have an impact on the maritime industry, but also to have an impact on the planet, through offering customers enhanced data solutions that are designed to impact not only a company’s bottom line, but also its environmental footprint,” said Peter Mabson, exactEarth CEO.
Strategic Rationale
Increases Spire’s customer base by over 75 percent. In the maritime S-AIS (Satellite-Automatic Identification System) industry, exactEarth will accelerate Spire’s expansion by adding over 150 customers. These customers in the commercial and government sectors will provide substantial cross-selling opportunities of Spire’s data and analytics products.
Minority indirect ownership stake in IoT provider Myriota, a fast growing player in the low-cost, low-power, secure direct-to-orbit satellite connectivity for Internet of Things. This affords Spire a solid first foothold in this high-growth industry of space-based IoT solutions. exactEarth will retain its board seat.
Strong Addition to ARR. With approximately 90 percent of exactEarth’s US$18.2 million LTM revenue under subscription contracts, and a Net Retention Rate of approximately 130 percent, exactEarth will accelerate Spire’s growth in annual recurring revenue (ARR).
Expands Historical Database to accelerate AI/ML driven product development. exactEarth’s ten-year archive of AIS data will substantially increase Spire’s historical maritime (AIS) data set, accelerating Spire’s new product offerings and solutions.
Adds depth of experience to maritime and product development teams. With an average tenure of over seven years, exactEarth’s experienced sales and product development team will enhance Spire’s global market capability and reach in the maritime industry. Expands Spire’s geographic footprint. exactEarth sells to 39 countries around the world.
Details on the Proposed Transaction
The total transaction consideration of CAD$204.2m (US$161.2m) is comprised of approximately CAD$130.9 million (US$103.4 million) in cash and CAD$73.2 million (US$57.8 million) in Spire’s Class A Common Stock.
The transaction will be carried out through a plan of arrangement under the Canada Business Corporations Act. Under the plan of arrangement, holders of exactEarth common shares will receive CAD$2.5009 (US$1.9751) in cash and 0.1 share of Spire Class A Common Stock for each exactEarth common share held. Based on the 10-day volume weighted average price of Spire’s Class A Common Stock on the New York Stock Exchange of US$11.0223 (CAD$13.9564) on Monday September 13, 2021, this represents total per share consideration of CAD$3.90 (US$3.08) per common share for exactEarth shareholders. On completion of the arrangement, the former shareholders of exactEarth will hold approximately 3.8 percent of Spire, based on currently outstanding share capital.
The transaction is expected to be accretive on both a revenue basis and an adjusted EBITDA basis. The transaction has been approved by the boards of directors of both companies and exactEarth’s board of directors recommends that exactEarth shareholders vote in favor of the transaction.
The completion of the transaction is subject to approval by at least two-thirds of the votes cast at a special meeting of exactEarth shareholders which is expected to take place in November 2021. The transaction is also subject to applicable regulatory approvals and the satisfaction of certain closing conditions customary in transactions of this nature. The transaction is not subject to any financing condition.
The directors, officers and certain shareholders of exactEarth, collectively holding approximately 60% of its outstanding common shares, have entered into voting support agreements under which they have agreed to support and vote in favor of the transaction. This acquisition is expected to close in calendar 4Q21 or in calendar 1Q22.
Advisors
RBC Capital Markets, LLC is acting as financial advisor and Osler, Hoskin & Harcourt LLP and Wilson Sonsini Goodrich & Rosati are acting as legal advisors to Spire in connection with the transaction. Cormark Securities Inc. is acting as financial advisor and Stikeman Elliott LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are acting as legal advisor to exactEarth in connection with the transaction.