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ARC Document Announces Merger Deal With TechPrint Holdings

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ARC Document Solutions, Inc. (ARC - Free Report) recently announced that it has inked a definitive merger agreement with TechPrint Holdings, LLC. This deal involves key personnel from ARC Document, including its chairman and CEO (Mr. Suriyakumar), president, CFO, CTO and private investors, who are part of the acquisition group.

Per the deal, ARC Document will merge with TechPrint Merger Sub, Inc., a subsidiary of TechPrint Holdings, and ARC’s shareholders will receive $3.40 per share in cash. The acquisition group controls about 15.8% of voting rights of the company's outstanding capital stock and owns approximately 19.6% of its shares. The proposed cash offer will provide a 28.8% premium compared with ARC’s stock price before the acquisition deal was made public.

The merger agreement was approved by the company’s board of directors, excluding the CEO, who did not participate in the voting process. The approval followed a recommendation from a special committee of independent directors. The company’s stockholders will be asked to vote on the merger agreement and approve the transaction at a meeting, the date of which will be announced later.

The transaction is expected to close by the end of 2024, subject to customary closing conditions, including waiting for the necessary period under the Hart-Scott-Rodino Antitrust Improvements Act. The combined companies’ common stock will not be listed under the New York Stock Exchange.

U.S. Bank, BMO Bank, Zions Bancorporation and City National Bank will offer a facility of $185 million to help fund a portion of this transaction. In addition to that, Suriyakumar and Pathiratne (a private investor) will contribute $11 million of equity financing in accordance with the commitment letter related to the transaction.

The company’s board of directors approved a quarterly cash dividend of 5 cents per share, payable to shareholders on Nov. 9, 2024, of record as of Oct. 31, 2024. If the transaction closes before Oct. 31, the dividend will be paid on the closing date. If it closes between Oct. 31 and Nov. 29, the dividend will be paid after the closure of the transaction.

Zacks Rank

ARC currently carries a Zacks Rank #3 (Hold). Shares of the company have gained 25.1% compared with the industry’s 21.7% growth in the past three months.

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