InnerWorkings to Merge with HH Global

InnerWorkings Inc., a top 50 distributor headquartered in Chicago, and HH Global Group Limited announced that they have signed a definitive agreement to combine operations. Under the terms of the agreement, HH Global will acquire InnerWorkings for $3.00 per share in an all-cash transaction representing approximately $177 million in equity value. This represents a premium of 127 percent to the closing price, and a premium of 104 percent to the 90-day volume weighted average price as of July 15, 2020. The transaction has been unanimously approved by the boards of directors of both companies.

“Over the past several months, we’ve been taking actions to put InnerWorkings in the best position to weather the challenging environment in which we’re operating,” said Rich Stoddart, CEO of InnerWorkings. “In these times of significant economic uncertainty, the board of directors and management determined to undertake a comprehensive process to preserve and enhance value for shareholders. After exploring a range of financing and strategic alternatives, and implementing meaningful cost-saving measures in response to the COVID-19 pandemic, we’re confident this combination represents the best path forward for our shareholders and InnerWorkings. In addition to delivering an immediate cash premium to our shareholders, the combination will create a company with a stronger balance sheet and will enhance our ability to accelerate our transformation and serve our client base.”

Robert MacMillan, chairman and group CEO of HH Global, released the following statement:

We are thrilled about this combination, as it significantly accelerates our ability to execute on the next phase of our strategy by broadening our service offering and expanding our global reach. Not only do our two companies have complementary offerings, capabilities and geographic operations, but we also share a deep commitment to quality, innovation and operational excellence. We have long admired InnerWorkings and have got to know the management team well over the last few months, and we are confident that together we will create an even stronger company. We look forward to welcoming InnerWorkings to the HH Global family.

Strategic Rationale

The combination will result in a world-class marketing engineering and execution firm that is well-positioned to serve global clients seeking innovative, end-to-end marketing solutions that lower costs and improve brand consistency, visibility, sustainability and speed to market. With complementary offerings and capabilities, InnerWorkings’ leading North American position and HH Global’s strong leadership presence in EMEA and APAC, the combined company will operate with global reach and scale, maintaining the agility and client-focused execution that is core to both InnerWorkings and HH Global’s strategic approach.

Together, the two companies will have a stronger operating model and balance sheet and will be well-positioned to continue InnerWorkings’ transformation and to build and maintain long-term client relationships as a true first-choice partner for leading brands. In addition, the combined company will benefit from the support of funds managed or advised by Blackstone Tactical Opportunities, an existing strategic minority equity investor in HH Global.

Additional Transaction Details

The transaction is subject to customary closing conditions, including approval by InnerWorkings’ shareholders and receipt of certain regulatory approvals, and is expected to be completed before the end of the fourth quarter of 2020.

Citigroup Global Markets Inc. is serving as exclusive financial advisor to InnerWorkings and Sidley Austin LLP is serving as legal counsel. Moelis & Company LLC is acting as HH Global’s exclusive financial advisor and Kirkland & Ellis LLP is serving as legal counsel.

Editor’s Note: Jim Anderson, founder of intermediary firm, Corporate Development Associates, performed his own deal analysis. “Back in 2002 when ‘print distributor’ INWK was still a private company, it had sales of just $5MM,” he said in his recent PrintStockWatch. “By INWK's first full year as a public company (2007), sales were $288.4MM and in 2019, INWK's sales had grown to an astounding $1.12B. Since the smaller (in sales) London-based HH Global's announced acquisition of InnerWorkings is such ‘big news,’ we decided to do a separate write-up on it.”

If you would like to receive the analysis, email Anderson at jaa@printmergers.com.