Gores Holdings III, a special purpose acquisition company sponsored by an affiliate of The Gores Group, has completed the acquisition of Platinum Equity portfolio company (PAE), a provider of outsourced solutions for enduring missions of the United States government and international partners for over 60 years. The transaction was unanimously approved by the Board of Directors of both Gores Holdings III and the ultimate parent company of PAE and was approved at a special meeting of Gores Holdings III’s stockholders on 7 February, 2020. There were 0.0005 per cent (virtually zero) redemptions in connection with the business combination. In connection with the transaction, Gores Holdings III has been renamed PAE Incorporated and its common stock and warrants now trade on Nasdaq under the symbols “PAE” and “PAEWW”, respectively.
As previously announced, the consideration payable to the stockholders of the Company will consist of a combination of cash and shares of Gores Holdings III common stock. In addition to the USD400 million of cash held in Gores Holdings III’s trust account, additional investors participated in the transaction through a USD220 million private placement, led by Alec Gores, Chairman and CEO of The Gores Group. As a result of the acquisition and the private placement, funds managed by affiliates of Platinum Equity, the prior majority owners of PAE, hold an approximate 23 per cent combined stake in the newly public company.
Founded in 1955, PAE is a leading provider of mission-critical services to the US government, armed forces and international customers including the US Department of State, Army, Navy, Air Force, NASA and others.
Headquartered in Falls Church, Virginia, PAE operates in approximately 60 countries across all seven continents.
“Through a culmination of efforts by a workforce dedicated to excellence and professionalism, PAE has reached this milestone. We’re grateful to Platinum Equity, Gores Holdings III and the investors who share our optimism in PAE’s growth value,” says PAE CEO John Heller. “Although we are now a public company, nothing changes with respect to our commitment to our customers, our exceptional employees and our focus on building on our nearly 65-year tradition of being a trusted partner to the US government and our allies worldwide.”
“John and his team provide exceptional leadership and I’m proud of the work we have done together growing the business over the past four years,” says Platinum Equity Partner Louis Samson, who is now a board member of the publicly traded company. “PAE is an outstanding platform for continued growth with a proven track record of successful M&A. The company now has a de-levered balance sheet and the public company currency of a listed business, which position the company well to participate in the consolidation underway in the government services sector. We are excited to participate in the company’s continued value creation through a meaningful remaining equity stake in the business.”
Mark Stone, CEO of Gores Holdings III, says: “We are honoured to be bringing PAE public. John and team have built an outstanding platform ready for its next stage of accelerated growth, further diversification, additional scale, and consolidation. We are eager to support and watch this next chapter unfold.”
As of the closing of the acquisition, the PAE Board of Directors consists of Marshall Heinberg, Paul T Bader, John P Hendrickson, John Heller, and Louis Samson.
Deutsche Bank Securities Inc and Evercore acted as lead financial advisors to Gores Holdings III. Deutsche Bank Securities Inc also acted as lead capital markets advisor, while Evercore, BofA Securities and Morgan Stanley & Co, LLC also acted as capital markets advisors and Moelis & Company LLC acted as financial advisor. Weil, Gotshal & Manges LLP acted as legal advisor to Gores Holdings III. Latham & Watkins LLP acted as legal advisor to Platinum Equity and PAE.
