Syniverse to go public via SPAC merger

TAMPA, Fla. – Syniverse, the "world's most connected company"TM and the premier global technology provider of mission-critical mobile platforms for carriers and enterprises, announced today that it has entered into a definitive merger agreement with M3-Brigade Acquisition II Corp. (NYSE: MBAC), a publicly traded special purpose acquisition company, which will result in Syniverse becoming a publicly traded company. The transaction implies an initial enterprise value for Syniverse of $2.85 billion, or an enterprise value-to-adjusted 2022E EBITDA multiple of approximately 12.1x, and will provide Syniverse with up to $1.165 billion in cash through a combination of equity and equity-linked capital. Upon closing of the transaction, the publicly traded company will be named Syniverse Technologies Corporation and its common stock will be listed on the New York Stock Exchange under ticker "SYNV."

Syniverse is a leading global provider of unified, mission-critical platforms enabling seamless interoperability across the mobile ecosystem. Syniverse's capabilities are expected to become increasingly valuable to its mobile carrier and enterprise customers during the transition to 5G mobile networks, which will accelerate growth in devices, traffic volumes, speed and lower-latency communications. 5G networks and the messages and applications on them require seamless and ubiquitous connectivity and coordination. Syniverse is the only global provider of services to bridge these technological and operational complexities.

Syniverse is also at the center of the large and growing Communications Platform as a Service (CPaaS) sector, with both digital native companies and large global enterprises increasingly using Application to Person (A2P) messaging and omni-channel mobile engagement to successfully engage, inform and transact with their customers, partners, and employees. The current rapid growth in the CPaaS sector is expected to accelerate as 5G networks expand and become a significant driver of revenue growth for Syniverse.

Today's announcement builds on the strategic partnership between Syniverse and Twilio (NYSE: TWLO) that was announced on March 1, 2021, through which Twilio agreed to make an equity investment of up to $750 million in Syniverse, with a minimum commitment of $500 million. In addition, as a part of this transaction, Twilio will become a significant minority owner of Syniverse.

Syniverse intends to use the up to $1.165 billion in equity and equity-linked capital to substantially reduce its debt, fund new value-added products and services, advance its strategy of investing in organic and inorganic growth, and increase its investment in data, machine learning and artificial intelligence technologies.

Following the closing of the merger, Syniverse will continue to be led by Chief Executive Officer Andrew Davies and its world class leadership team. The Carlyle Group ("Carlyle"), Syniverse's current majority owner, will retain all of its current investment in Syniverse and be the largest shareholder in the newly publicly traded company.

Transaction Overview

The business combination values Syniverse at an enterprise value of $2.85 billion. The transaction is expected to provide up to $1.165 billion of cash proceeds to the combined company. MBAC will provide up to $400 million of cash held in MBAC's trust account from its initial public offering in March 2021, and Twilio will make an investment of up to $750 million, with a minimum investment of $500 million.

Further, leading institutional investors, including Oak Hill Advisors and Brigade Capital Management, have committed to participate in the transaction through Private Investment in Public Equity (PIPE) commitments totaling $265 million, consisting of $69.2 million of common stock at $10.00 per share and $195.8 million of 7.5 percent dividend convertible preferred stock, with a conversion price of $11.50 per share. The convertible preferred stock provides flexible capital that further strengthens Syniverse's balance sheet. Existing Syniverse shareholders will roll 100% of their equity in the transaction and are expected to own approximately 40% of the combined company at closing.

Syniverse has also obtained committed debt financing for a new $1 billion term loan and a $165 million revolving credit facility to be completed at the merger closing, at which time Syniverse's existing debt will be repaid in full. As a result of these transactions, Syniverse's leverage will be significantly reduced and Net Debt to LTM Adjusted Financing EBITDA ratio will be approximately 3.7x.

MBAC's sponsor has agreed that a portion of its equity will vest only if the share price of the Company exceeds $12.50 per share over a specified period in accordance with customary provisions. This agreement will enhance alignment of the interests of MBAC's sponsor with the long-term value creation and performance of Syniverse.

The Boards of Directors of both MBAC and Syniverse have unanimously approved the proposed transaction. The transaction is expected to close before the end of 2021, subject to approval by MBAC stockholders, the expiration of the HSR Act waiting period and other customary closing conditions.

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