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VASCO Enters Agreement to Acquire Silanis
October 2015 by Marc Jacob
VASCO Data Security International, Inc. announced the execution of a definitive agreement to acquire privately held Silanis Technology, Inc. (Silanis), a provider of electronic signature (e-signature) and digital transaction solutions used to sign, send and manage documents. Silanis’ e-SignLive™ platform is trusted by some of the largest banks, insurers and government agencies. The acquisition demonstrates VASCO’s strong commitment to its vision of delivering new solutions that are in high demand within its financial services customer base, accelerating its transition to a recurring revenue model, strengthening its revenue base in North America, and expanding its customer base outside of its core banking business.
VASCO anticipates significant revenue synergies from the acquisition. Both VASCO and Silanis are focused on addressing the business needs of organizations conducting secure transactions that must meet strict regulatory and compliance requirements. VASCO has identified demand for digital transaction solutions among its customer base and, following the closing of the transaction, can immediately start selling Silanis solutions to its global banking customers. The banking segment is Silanis’ number one vertical.
Silanis, based in Montreal, Canada, utilizes a SaaS and on-premise subscription model for its customers who are located primarily in North America. Silanis expects to report revenues, determined under Canadian Generally Accepted Accounting Principles, of approximately USD $16 million for the full-year 2015, an increase of approximately 30% over full-year 2014. Based on bookings of new business through the third quarter of 2015, which were up more than 200% over the comparable period in 2014, Silanis is projecting that its revenues for 2016, on a standalone basis, will increase more than 25% over 2015.
Craig Le Clair, Principal Analyst at Forrester Research, reports a 53% average annual growth in the use of e-signatures since 2012 with the number of transactions settled using e-signatures topping 210 million and likely to reach more than 700 million in 2017. “A recent directive passed by the European Parliament and the Council of the European Union promises to solidify and promote e-signature adoption across the region,(1)” reported Mr. Le Clair. “Mobile transactions will push e-signature authentication to the device, with Europe leading the way in innovation. (2)” VASCO believes that its strength in mobile security combined with the ability to complete a legally enforceable transaction with e-signatures will provide organizations a pathway to increase the number of transactions completed on mobile devices.
e-SignLive, Silanis’ e-signature solution, delivers distinct advantages over competing solutions including the following:
– The ability to completely white-label the e-signature process for a seamless and branded experience to ensure the highest adoption rates.
– The most complete audit trails in the market, providing organizations with direct visibility into how and when the digital transaction took place.
– A unified platform that supports cloud, on-premise, and hybrid deployment options.
– Data centers around the globe that will help customers meet regulatory and in-country data residency requirements.
– Enterprise-grade solutions that can be easily deployed across an organization’s internal, business-to-business and customer-facing applications.
Financial Terms of the Transaction
Under the terms of the definitive agreement, VASCO will acquire all of the outstanding equity of Silanis for a cash consideration of $85 million, subject to customary closing conditions. The acquisition will be financed from VASCO’s existing cash balances. The acquisition is expected to be dilutive in 2016, on a GAAP and non-GAAP basis, which would exclude the amortization of purchased intangible assets. The acquisition is expected to be accretive in 2017 on a non-GAAP basis. Subject to a closing blackout period from December 1 through December 31, 2015, VASCO and Silanis will use commercially reasonable efforts to cause the closing to occur as soon as practicable, but in any event by January 31, 2016 or such other date as the Parties may agree to in writing.
Financial Advisors
BMO Capital Markets acted as exclusive financial advisor to VASCO and Arma Partners acted as exclusive financial advisor to Silanis.
