HGGC to Acquire Monotype

Publicly traded Monotype Imaging has agreed to be acquired by HGGC for $19.85 per share which represents a total equity value of approximately $825 million.

Monotype Imaging (NASDAQ: TYPE) is a digital type foundry and design company. The company was founded in 1887 and has been responsible for many developments in printing technology, particularly the Monotype machine, the first fully mechanical typesetter, and has developed many widely used typeface designs, including Times New Roman, Gill Sans, and Arial.

Monotype has been acquisitive and since 2000 has purchased Linotype GmbH, International Typeface Corporation, Bitstream Inc. and FontShop which has given it the rights to many widely known font designs including Helvetica, ITC Franklin Gothic, Optima, Avant Garde, and Palatino. Monotype also owns MyFonts, an online retailer used by many independent font design studios.

Today, the company owns and distributes licenses to more than 10,000 typefaces. Monotype was acquired by TA Associates from Agfa Corporation in November 2004 and taken public by TA in July 2007. Monotype is headquartered near Boston in Woburn, MA (www.monotype.com).

In fiscal 2018, Monotype had revenue of $246.7 million, an increase of 5% from 2017, and non-GAAP net adjusted EBITDA of $73.4 million, a 31% increase from 2017. With a purchase price of $825 million, this equals an EBITDA valuation multiple of 11.2x.

“Over the last several years, Monotype has strategically shifted its business from primarily serving a small group of OEM manufacturers to one that addresses the needs of thousands of brands and millions of creative professionals worldwide,” said CEO Scott Landers. “As a private company, we will have the financial support and added flexibility to invest in ways that deliver more value and improve the overall experience for our customers. This transaction is a testament to our talented employees and their dedication to serving our customers, and we look forward to partnering with HGGC as we continue helping customers maximize their customer engagement in today’s digital, mobile and global landscape.”

“We have been impressed with the quality and expertise of the Monotype team led by Scott, whose relentless commitment to customers has helped brands realize their full identity and express it to the world,” said Rich Lawson, CEO and co-founder at HGGC.  “We look forward to working together to help advance Monotype’s strategy and continue delivering the products and services that allow for brand expression and differentiation.”

HGGC (formerly Huntsman Gay Global Capital) makes leveraged buyout, recapitalizations and growth equity investments in middle market companies. The firm invests from $25 million to $100 million of equity per transaction in companies that have revenues of $100 million or more, enterprise values of $100 million to $500 million, and EBITDA of $15 million or more. Sectors of interest include business services, consumer, financial services, healthcare, industrial services, information services, and software. In December 2016, HGGC closed its third fund, HGGC Fund III LP, with total capital commitments of $1.8 billion, surpassing its target of $1.5 billion and reaching its hard cap. HGGC is based in Palo Alto (www.hggc.com).

J.P. Morgan is the financial advisor to Monotype and Goodwin Procter is providing the company legal services.

Deutsche Bank Securities is the financial advisor to HGGC and will also be the lead arranger on the debt financing for the transaction. Kirkland & Ellis is providing legal services to HGGC.

This transaction, which was unanimously approved by Monotype’s board of directors, is expected to close in the fourth quarter of 2019.

© 2019 Private Equity Professional | July 29, 2019

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