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Solera To Acquire 100 Percent Of Identifix; Expands Automotive SMR Platform

The acquisition will enable Solera to strengthen its SMR business in the U.S. and introduce the Identifix platform to the global automotive industry.

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Solera Holdings - LogoSolera Holdings has entered into a definitive agreement to acquire 100 percent ownership of Identifix, a leading data-driven software-as-a-service company within the $8 billion vehicle service, maintenance and repair (SMR) market. Identifix builds proprietary databases, proven workflow solutions and expert crowd-sourced experiences that help mechanical repair shops and auto dealers increase their efficiency, profitability and customer loyalty.

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Solera purchased 50 percent of Identifix in November 2013 in connection with its Service Repair Solutions (SRS) joint venture (JV) with Welsh Carson Anderson & Stowe (WCAS). Solera subsequently expanded its vehicle lifecycle footprint with the acquisitions of automotive service and customer relationship management (CRM) software companies AutoPoint (acquired from the SRS joint venture in April 2014), Service Dynamics and DMEautomotive in 2015. Today, Solera’s comprehensive SMR platform is utilized by more than 275,000 auto technicians to process more than 1 million SMR events each week.

“Identifix is a one-of-a-kind asset for the SMR vertical and an important pillar of our digital risk and asset management platform,” said Tony Aquila, Solera’s founder, chairman and CEO. “Since our initial investment, the Identifix business has performed in-line with our expectations and has achieved double-digit revenue growth each year. 100 percent ownership of Identifix will not only allow us to introduce the power of Identifix to international markets, but will also accelerate the integration of our industry-leading SMR solution into our Digital Garage app.”

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The Digital Garage is a mobile app invented by Solera to help both automotive service providers and drivers to digitally manage the buying, maintaining and selling of vehicles. Scheduled for its debut release in the United Kingdom later this year, the Digital Garage leverages Solera’s risk and asset management technologies to create an application that allows car owners to digitally manage the ownership lifecycle of their vehicles from their mobile devices.

With full ownership of Identifix as well as a critical mass of additional assets that have increased Solera’s total addressable market, Solera will accelerate its strategic focus on further expanding and connecting its risk and asset management platform to drive towards its Mission 2020 goal of $2 billion in revenue and $840 million of Adjusted EBITDA by June 30, 2020.

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“Over the past nine years, we’ve invested over $3 billion to acquire 35 key businesses,” said Aquila. “We are now accelerating our focus on leveraging synergies to expand our leadership in risk and asset management, including our growing digital SMR and CRM businesses, as well as our upcoming Digital Garage app.”

Transaction Terms

The equity purchase agreement provides that Solera will purchase the remaining SRS joint venture interests from WCAS for a purchase price of approximately $594.8 million in cash plus WCAS’s approximate share of SRS’s present cash balance, which share is $25 million. This amount equals 2.25x WCAS’s invested capital in SRS. Based on Solera’s initial investment in the SRS joint venture, its purchase of AutoPoint from the joint venture, and the purchase of the remaining SRS joint venture interests from WCAS, the total SRS purchase price is approximately 16.0x the Adjusted EBITDA for SRS and AutoPoint for the 12 months ended March 31. Given the potential core growth opportunities of this strategic and profitable asset, as well as further potential synergies with the Digital Garage, Solera views a 16.0x purchase price to Adjusted EBITDA multiple as an effective use of capital. Solera also expects that the purchase price to Adjusted EBITDA multiple will decrease based upon the Adjusted EBITDA of SRS and Autopoint for the fiscal years ended June 30, 2015 and 2016.

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The purchase price was negotiated with WCAS and was not determined based on the existing “call option” formula (which, if exercised by Solera, requires Solera to purchase 100 percent of WCAS’s SRS joint venture interests at a price of 3.0x WCAS’s invested capital) or “put option” formula (which, in defined intervals or upon specified events, permits WCAS to sell all or portions of its SRS joint venture interests to Solera at either 2.0x WCAS’s invested capital or the greater of 2.0x WCAS’s invested capital and 15.0x SRS’s trailing EBITDA, in each case multiplied by the purchased interests) provided in the stockholders agreement governing the SRS joint venture.

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The acquisition is subject to certain closing conditions and is expected to close immediately after the closing of Solera’s senior notes financing.

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