Lionbridge Technologies (LIOX) to Acquire CLS Communication in ~$77M Deal

Lionbridge Technologies (Nasdaq: LIOX) announced a definitive agreement to acquire CLS Communication, a privately-held provider of translation solutions to clients in the financial services, industrial, public sector and life sciences markets. The combination of Lionbridge and CLS will address growing demand for integrated, technology-enabled translation solutions that allow organizations to create, translate and manage digital content worldwide.

Lionbridge expects to purchase CLS Communication for approximately 74 million Swiss Francs, or approximately $77 million US Dollars in cash, subject to estimated cash and debt adjustments at closing and certain post-closing adjustments. The acquisition is being funded using Lionbridge's existing cash and a new credit facility through its long-standing banking partner, HSBC, who is acting as the leading syndicator.

"As organizations continue to expand their online engagement across geographies and channels, the demand for integrated, global-scale translation services is accelerating," said Rory Cowan, CEO, Lionbridge. "CLS is the ideal partner for Lionbridge with a proven track record of providing high-quality professional solutions to clients in diverse, highly-regulated industries. With highly complementary geographic reach and vertical market expertise, we believe this business combination positions Lionbridge as the clear market leader in global translation and content solutions worldwide."

Headquartered in Zurich, Switzerland, with operations in 10 countries in Europe, North America and Asia, CLS provides Lionbridge with complementary geographic coverage and several long-standing, multi-million dollar relationships with clients in the financial services, industrial, public sector and life sciences markets. The Company has approximately 600 professionals including global program managers, linguists and language technology experts who create, optimize and translate highly complex technical, marketing and regulatory content for world leading brands.

"CLS realizes significant benefits by joining forces with Lionbridge," said Matthias Trumpy, CEO of CLS Communication. "We expect to gain additional market presence and a proven global delivery platform to complement our existing operations. Our employees and clients will benefit from becoming part of a larger organization with a broader suite of solutions that span the full lifecycle of global content."

Details about the announcement can be found on the announcement page on Lionbridge.com here.

Lionbridge expects the acquisition to close in the first quarter of 2015.

"As we focus on deploying our language technology, optimizing our combined operations, and reducing redundant overhead costs, we expect rapid synergies of the combined business. This allows us to accelerate our path to double digit EBITDA margin in 2016 as a combined business and accelerate our end market diversification," continued Cowan.

The acquisition is expected to be accretive to non-GAAP earnings by approximately $0.07 to $0.12 per share in 2015 and accretive to non-GAAP earnings by approximately $0.17 to $0.22 per share in 2016 depending on tax and timing of synergies. The Company defines non-GAAP adjusted earnings as net income excluding merger, restructuring and acquisition-related charges, amortization of acquisition-related intangible assets, and stock-based compensation. The financial impact of the acquisition is presented on a non-GAAP basis, as GAAP acquisition-related charges, including, but not limited to, amortization of purchased intangible assets and potential restructuring charges, are not currently determinable.

Union Square Advisors LLC is serving as exclusive financial advisor, and VISCHER Ltd. is serving as legal advisor to Lionbridge. William Blair & Company is serving as financial advisor, and Wenger & Vieli AG is serving as legal advisor to CLS.

Purchase price is based on based on CHF/USD exchange rate of 1.035.

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