NEW YORK, PHILADELPHIA and LAWRENCEVILLE, N.J., Oct. 19, 2020 /PRNewswire/ -- Billtrust, a leader
in B2B order-to-cash solutions, and South Mountain Merger
Corporation (Nasdaq: SMMC.U) ("South
Mountain"), a publicly traded special purpose acquisition
company, today announced they have entered into a definitive
business combination agreement. The combined company (the
"Company") will continue as a publicly listed entity and have an
implied estimated enterprise value of approximately $1.3 billion at closing, based on current
assumptions.
Upon closing of this transaction, the Company intends to change
its name to BTRS Holdings Inc. and is expected to trade on The
Nasdaq Stock Market under a new ticker symbol. Billtrust's
management team led by Flint Lane, Founder and Chief Executive
Officer, Steve Pinado, President,
and Mark Shifke, Chief Financial
Officer, will continue to lead the Company.
Billtrust is a leading provider of cloud-based software and
integrated payment processing solutions that simplify and automate
B2B commerce. Accounts receivable (AR) is broken and relies on
conventional processes that are outdated, inefficient, manual and
largely paper-based. Billtrust is at the forefront of the digital
transformation of AR, providing mission-critical solutions that
span credit decisioning and monitoring, online ordering, invoicing,
cash application and collections. Billtrust's solutions integrate
with a number of ecosystem players, including financial
institutions, enterprise resource planning (ERP) systems, and
accounts payable (AP) software platforms, to help customers
recognize revenue more quickly and efficiently. Customers use
Billtrust's platform to transition from expensive paper invoicing
and check acceptance to efficient electronic billing and payments,
which accelerates revenue capture, generates cost savings, and
provides a better user experience.
Billtrust's customers have a daunting task of capturing and
applying payments from hundreds or thousands of their buyer
customers, all via different channels and payment types. In
November 2018, Billtrust created the
Business Payments Network (BPN), which is a powerful network that
connects buyers, suppliers, and financial institutions to simplify
and streamline the process of accepting electronic payments. The
BPN has built-in integrations with leading ERP and accounting
systems, AP software providers, payment card issuers and payment
acceptance networks. The BPN offers an online supplier business
directory, programmatic payment preferences, payment acceptance
flexibility and streamlined reconciliation of remittance data.
Flint Lane, Founder and CEO of Billtrust, commented, "Over the
last 19 years, we have built comprehensive B2B commerce solutions
across the value chain, creating real business outcomes and
significant value for our customers, while making it easy for them
to get paid. As we begin our journey as a public company, we are
thrilled to partner with the South
Mountain team and know we will benefit from their extensive
industry experience. We believe AR is ripe for innovation, and
together we will continue to invest in opportunities to scale the
business, growing both organically and inorganically, as we seek to
tackle the large total addressable market. As a leader in AR
automation, we believe Billtrust is well-positioned to own a
disproportionate share."
Chuck Bernicker, CEO of
South Mountain, said, "Over the
years I have had the pleasure of watching Flint and the Billtrust
team solve some of the most complex problems in AR with their
powerful technology platform. Billtrust's end-to-end solutions are
truly driving the digital transformation of AR and represent the
future of B2B payments. I couldn't be more excited to partner with
this visionary team to seek to transform B2B commerce."
Transaction Summary
The transaction reflects an implied estimated enterprise value
at closing of $1.3 billion,
representing an 8.0x and 10.5x multiple to 2021 expected GAAP total
revenue of $161 million and Non-GAAP
net revenue of $123 million,
respectively. The cash component of the purchase price to be paid
to the equity holders of Billtrust is expected to be funded by
South Mountain's cash in trust
(minus any redemptions by South
Mountain's existing public stockholders), and a $200 million private placement raised at
$10.00 per share. The balance of the
consideration payable to the existing Billtrust equity holders will
consist of shares of common stock of the Company.
Following the transaction, the Company is expected to be debt
free with approximately $200 million
in cash, offering significant capital flexibility for continued
growth, both organic and inorganic.
Existing Billtrust equity holders have the potential to receive
an earnout of additional shares of common stock and/or RSUs of the
Company, if certain stock price targets are met as set forth in the
definitive business combination agreement. Existing Billtrust
equity holders, including management, will become the majority
owners of the Company. Current stockholders of South Mountain will also become stockholders
of the Company and will exchange their shares of South Mountain
common stock for common stock of the Company on a share for share
basis.
The transaction has been unanimously approved by the boards of
both Billtrust and South Mountain.
The transaction is expected to close in early 2021, subject to
approval by the stockholders of South
Mountain, the effectiveness of a registration statement to
be filed with the Securities and Exchange Commission (the "SEC") in
connection with the transaction, and other customary closing
conditions including a minimum cash condition of $225 million of which $200
million has been committed via the PIPE and an incremental
$22 million has been committed in the
form of a non-redemption commitment from an institutional
shareholder.
Additional information about the transaction, including a copy
of the business combination agreement, will be provided in a
Current Report on Form 8-K to be filed by South Mountain with the SEC and available at
www.sec.gov. In addition, South
Mountain intends to file a registration statement on Form
S-4 with the SEC, which will include a proxy statement/consent
solicitation statement/prospectus, and will file other documents
regarding the proposed transaction with the SEC.
Advisors
Citi is serving as exclusive financial and capital markets
advisor to South Mountain, and
Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as
legal counsel to South Mountain in
connection with the transaction.
J.P. Morgan is serving as exclusive financial and capital
markets advisor to Billtrust, and Cooley is serving as legal
counsel to Billtrust in connection with the transaction.
Citi and J.P Morgan are serving as placement agents on the
concurrent private placement and Mayer Brown is serving as legal
counsel to the placement agents.
Webcast Information
A webcast presentation hosted by South
Mountain and Billtrust can be found at the following link:
www.billtrust.com/about/investors/.
About South Mountain Merger Corporation
South Mountain Merger Corporation is a special purpose
acquisition company formed for the purpose of effecting a merger,
share exchange, asset acquisition, share purchase, reorganization
or similar business combination with one or more businesses in the
FinTech industry.
About Billtrust
Billtrust accelerates cash flow by automating credit
decisioning and monitoring, invoice delivery, payment capture, cash
application, and collections. Billtrust customers improve
operational efficiency across the order-to-cash spectrum via a
flexible and integrated cloud-based solution set. Finance
executives and A/R specialists recommend Billtrust for the
remarkable cost savings, ease-of-use, process efficiency, and
improved customer satisfaction rates. For more information,
visit Billtrust.com.
Important Information and Where to Find It
This communication is being made in respect of the proposed
business combination transaction involving South Mountain and Billtrust. A full
description of the terms of the transaction is expected to be
provided in a registration statement on Form S-4, which will
include a proxy statement of South
Mountain, a consent solicitation statement or Billtrust and
prospectus of South Mountain, to
be filed by South Mountain with
the SEC. South Mountain urges
investors, stockholders and other interested persons to read, when
available, the preliminary proxy statement/consent solicitation
statement/prospectus as well as other documents filed with the SEC
because these documents will contain important information about
South Mountain, Billtrust and the
transaction. After the registration statement is declared
effective, the definitive proxy statement/consent solicitation
statement/prospectus to be included in the registration statement
will be mailed to stockholders of South
Mountain as of a record date to be established for voting on
the proposed transaction. Stockholders will also be able to obtain
a copy of the proxy statement/consent solicitation
statement/prospectus, without charge, by directing a request to:
South Mountain Merger Corporation, 767 Fifth Avenue, 9th
Floor, New York, NY 10153. The
preliminary and definitive proxy statement/consent solicitation
statement/prospectus to be included in the registration statement,
once available, can also be obtained, without charge, at the SEC's
website (www.sec.gov). The information contained on, or that may be
accessed through, the websites referenced in this press release is
not incorporated by reference into, and is not a part of, this
press release.
Participants in the Solicitation
South Mountain and Billtrust,
and their respective directors and executive officers, may be
considered participants in the solicitation of proxies with respect
to the potential transaction described in this press release under
the rules of the SEC. Information about the directors and executive
officers of South Mountain is set
forth in South Mountain's Annual
Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC
on March 20, 2020, and its Current
Report on Form 8–K, which was filed with the SEC on June 29, 2020. Information regarding other
persons who may, under the rules of the SEC, be deemed participants
in the solicitation of the stockholders in connection with the
potential transaction will be set forth in the proxy
statement/consent solicitation statement/prospectus when it is
filed with the SEC. These documents can be obtained free of charge
from the sources indicated above.
Non-Solicitation
This press release is not a proxy statement or solicitation of a
proxy, consent or authorization with respect to any securities or
in respect of the potential transaction and shall not constitute an
offer to sell or a solicitation of an offer to buy the securities
of South Mountain or Billtrust,
nor shall there be any sale of any such securities in any state or
jurisdiction in which such offer, solicitation, or sale would be
unlawful prior to registration or qualification under the
securities laws of such state or jurisdiction. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of the Securities Act of 1933, as amended.
Forward-Looking Statements
This press release includes, and oral statement made from time
to time by representatives of South
Mountain and Billtrust may contain, statements that are not
historical facts but are forward looking statements for purposes of
the safe harbor provisions under the United States Private
Securities Litigation Reform Act of 1995. Forward-looking
statements generally are accompanied by words such as "believe,"
"may," "could," "will," "estimate," "continue," "anticipate,"
"intend," "target," "goal," "expect," "should," "would," "plan,"
"predict," "project," "forecast," "potential," "seem," "seek,"
"future," "outlook," and similar expressions that predict or
indicate future events or trends or that are not statements of
historical matters. These forward-looking statements include, but
are not limited to, statements regarding projections,
estimates and forecasts of revenue and other financial and
performance metrics and projections of market opportunity and
expectations, South Mountain's and
Billtrust's ability to consummate the transaction between them, the
estimated implied enterprise value of the Company, the capabilities
and benefits to customers of Billtrust's technology platform, the
advantages and expected growth of BPN, Billtrust's ability to scale
and grow its business, Billtrust's ability to digitally transform
the AR industry, the cash position of the Company following
closing, the timing of the closing of the transaction and
South Mountain's ability to obtain
the financing through the PIPE and non-redemption commitment
necessary to consummate the potential transaction. These statements
are based on various assumptions and on the current expectations of
South Mountain's and Billtrust's
management and are not predictions of actual performance. These
forward-looking statements are provided for illustrative purposes
only and are not intended to serve as, and must not be relied on by
any investor as, a guarantee, an assurance, a prediction or a
definitive statement of fact or probability. Actual events and
circumstances are difficult or impossible to predict and will
differ from assumptions. Many actual events and circumstances are
beyond the control of South
Mountain and Billtrust. These forward looking statements are
subject to a number of risks and uncertainties, including
Billtrust's ability to attract and retain customers and expand
customers' use of Billtrust's products or services; market,
financial, political and legal conditions; the impact of the
COVID-19 pandemic on Billtrust's business and the global economy;
the inability of the parties to successfully or timely consummate
the proposed business combination, including the risk that any
required regulatory approvals are not obtained, are delayed or are
subject to unanticipated conditions that could adversely affect the
combined company or the expected benefits of the proposed business
combination or that the approval of the stockholders of
South Mountain or Billtrust is not
obtained; failure to realize the anticipated benefits of the
proposed business combination; risks relating to the uncertainty of
the projected financial and operating information with respect to
Billtrust; risks related to future market adoption of Billtrust's
offerings; risks related to Billtrust's market strategy and
subscription business model; the effects of competition on
Billtrust's future business; the amount of redemption requests made
by South Mountain's public
stockholders; the ability of South
Mountain or the combined company to issue equity, including
in the PIPE, or equity-linked securities in connection with the
proposed business combination or in the future, and those factors
discussed in South Mountain's
final prospectus filed on June 21,
2019, Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 and Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2020 and June
30, 2020, in each case, under the heading "Risk Factors,"
and other documents of South
Mountain filed, or to be filed, with the SEC. If the risks
materialize or assumptions prove incorrect, actual results could
differ materially from the results implied by these forward-looking
statements. There may be additional risks that South Mountain and Billtrust presently do not
know or that they currently believe are immaterial that could also
cause actual results to differ from those contained in the
forward-looking statements. In addition, forward-looking statements
reflect South Mountain's and
Billtrust's expectations, plans or forecasts of future events and
views as of the date of this press release. South Mountain and Billtrust anticipate that
subsequent events and developments will cause their assessments to
change. However, while South
Mountain and Billtrust may elect to update these
forward-looking statements at some point in the future,
South Mountain and Billtrust
specifically disclaim any obligation to do so. These
forward-looking statements should not be relied upon as
representing South Mountain's or
Billtrust's assessments as of any date subsequent to the date of
this press release. Accordingly, undue reliance should not be
placed upon the forward-looking statements.
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SOURCE Billtrust
