Constellation Software (TSX:CSU) to Spin Out

Posted on September 21, 2020 by Mathieu Litalien

StockTrades Take:

This is one of the more interesting new public offerings on our radar. Long term subscribers will know that we are big fans of Constellation Software and its management team. We consider them to be a leading and best-in-class serial acquirer. 

The news that it is spinning out Topiscus is a notable event. Why? It is the first time in its history that CSU is choosing to spin out one of its subsidiaries into an independently traded company. According to RBC Dominion Securities analyst Paul Treiber - “Constellation believes that will grow more quickly and perform better as an independent public company than it would within Constellation,”

According to the filing, generated approximately €518-million and has an Enterprise Value of approximately €1.2-billion.

CSU shareholders will receive 1.86 subordinated voting shares for each CSU share they own. Once the spinoff is complete, CSU will still own 30.4% of subordinate voting shares.

Topicus will be listed on the Toronto Venture Exchange, and have a mandate to acquire rival European tech companies focused on health care, government and education software. If CSU's strong history of execution is any indication, it will certainly be one to watch once it begins trading.

Of note, no timetable has been given but we will be sure to update subscribers as new information becomes available. 


NEWS Release

Constellation Software Inc. Files Preliminary Prospectus in Connection with Proposed Spin Out

TORONTO, Sept. 21, 2020 (GLOBE NEWSWIRE) -- Constellation Software Inc. (“Constellation”) (TSX:CSU) announced today that a preliminary prospectus has been filed in all provinces and territories of Canada in connection with its previously announced intention to explore opportunities for a future public listing of the shares of Inc.

On May 20, 2020, Constellation, acting through its TSS operating group and its subsidiary TPCS Holding B.V., entered into a binding agreement with IJssel B.V. to purchase 100% of the shares of B.V. (“Topicus”), a Netherlands-based diversified vertical market software provider. In connection with the anticipated closing of the acquisition and the public listing of the Inc. shares, TSS will be spun out of Constellation and will operate together with Topicus as a separate publicly traded company.

Under the proposed transaction structure, Constellation will remain a significant shareholder of and the current Constellation shareholders will be entitled to receive, pro rata and by way of a dividend-in-kind, subordinate voting shares in Inc. A record date for the distribution of the dividend-in-kind will be set at a later date.

The spin out transaction and listing is subject to approval of the TSX Venture Exchange and acceptance of a final prospectus by the securities regulatory authorities.

Forward Looking Statements

Certain statements herein may be “forward looking” statements that involve known and unknown risks, uncertainties and other factors that may cause the actual events to be materially different from any future events expressed or implied by such forward-looking statements. Words such as “may”, “will”, “expect”, “believe”, “plan”, “intend”, “should”, “anticipate” and other similar terminology are intended to identify forward looking statements. Forward looking statements in this press release include, but are not limited to, the intention of to explore opportunities for a future public listing of its shares, and the intention to have Constellation and its current shareholders become shareholders of Such forward looking statements involve significant risks and uncertainties, should not be read as guarantees of future results, and will not necessarily be accurate indications of whether or not such results will be achieved, or when such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward looking statements. These forward looking statements reflect current assumptions and expectations regarding future events and are made as of the date hereof and Constellation assumes no obligation, except as required by law, to update any forward looking statements to reflect new events or circumstances.

About Total Specific Solutions

TSS is one of Constellation’s six Operating Group companies, based in the Netherlands and solely focused on the European vertical market software industry.

About Topicus

Topicus is a Netherlands based leader in building and running smart vertical market software since 2001. Their focus is on innovation through vertical market integration. Topicus connects organizations, professionals and end users within and across the vertical markets of education, healthcare, municipalities and financial services.

About Constellation Software Inc.

Constellation acquires, manages and builds vertical market software businesses that provide mission-critical software solutions.

For further information, contact:

Constellation Software Inc.

Jamal Baksh, Chief Financial Officer

Tel: (416) 861-2279

Disclaimer: The writer of this article or employees of Stocktrades Ltd may have positions in securities listed in this article. Stocktrades Ltd may also be compensated via affiliate links in this post. Stocktrades Ltd will run advertisements on our posts. These advertisements do not represent an endorsement by us.

Mathieu Litalien

About the author

Mathieu is an individual investor and has been investing part-time for the better part of the past 20 years. He is primarily interested in fundamental analysis, focusing on the long-term and his portfolio is composed primarily of dividend-paying equities. Mathieu has a moderate risk profile and also looks for growth and value. His passion for finance and the markets have led him to his MBA and writing for Seeking Alpha and Stocktrades. Mathieu also focuses primarily on stock research and content production for Premium and the Stocktrades blog.