Quarterhill closed its previously announced acquisition of 100% of the outstanding equity of Richardson, TX-based Electronic Transaction Consultants, an Intelligent Transportation Systems company focused on tolling and mobility systems.
On a post-synergy basis, within the next 12 to 18 months, Quarterhill estimates that Electronic Transaction Consultants will generate annualized revenue between C$95 million ($75.36 million) to C$120 million ($95.19 million) and adjusted EBITDA between C$12.5 million ($9.92 million) to C$15 million ($11.9 million).
The price for the acquisition is C$150 million ($118.99 million). Quarterhill will fund C$75 million ($59.5 million) of the acquisition price with cash on-hand and C$75 million ($59.5 million) with newly established syndicated debt facilities. The debt facilities will include a C$63 million ($49.98 million) term debt facility and a C$19 million ($15.07 million) revolving credit facility. To pay for the acquisition, Quarterhill will draw the term debt facility in full and C$12 million ($9.52 million) on the revolving credit facility. A syndicated of banks led by HSBC Bank Canada is leading the debt financing.
“This transformational acquisition establishes Quarterhill as a leader in ITS; delivers scale in the tolling market, an area where we see strong growth trends; and significantly diversifies our future financial results,” Paul Hill, CEO of Quarterhill, said. “The transaction is also a significant commitment to our M&A strategy in ITS. So far in 2021, we have completed three acquisitions at an aggregate value of almost $160 million, demonstrating great progress on our five-year, $400 million M&A capital deployment target.
“ETC’s tolling business is complementary to IRD’s enforcement business and we see significant potential for revenue synergies between the two companies with product and geographic expansion being two areas where they will be able to support one another. ETC also gives us a platform in tolling from which its experienced leadership team will pursue both organic and acquisitive growth opportunities. Governments are increasingly seeking new revenue sources to pay for badly needed infrastructure projects, and we believe our ITS business is well positioned to capitalize on these industry trends.”
