Olive.com To Go Public Through Merger With MDH Acquisition Corp.
Benzinga | Jul 21, 2021 04:37PM EDT
Olive.com To Go Public Through Merger With MDH Acquisition Corp.
* Market Leader. PayLink Direct, an industry leading payment services provider that currently has the largest market share, and Olive.com, a leading digital vehicle protection plan platform, will become public as Olive Ventures Holdings, Inc. The company will be known as Olive.com, the name of the existing digital platform.
* High-Growth Digital Platform with Highly Profitable Payments Services Division. Olive.com has grown rapidly with 144.5% growth in net premium over the last four quarters, and PayLink Direct has a 15-year track record of profitability. The combined business generated 2020 Adjusted EBITDA of $35.5 million and net income of $13.5 million.
* $260 Billion and Growing Total Addressable Market (TAM) Opportunity. Megatrends of extended auto ownership before, during and coming out of the pandemic provide strong tailwinds to Olive.com.
* Strong Investor Base with Aligned Interests. Early PayLink Direct and Olive.com investors, affiliates of funds managed by affiliates of Fortress Investment Group and Milestone Partners, to rollover 100% of their common equity interests into the new public company. MDH Acquisition Corp.'s ("MDH") sponsor will tie a substantial portion of its economic interests to Olive.com's future performance.
* Old Republic Insurance and Ally Financial Inc. join as strategic partners.
* MDH Executive Chairman Franklin McLarty to become Chairman of Olive.com.
CHICAGO--(BUSINESS WIRE)-- PayLink Direct and Olive.com, affiliated businesses and leaders in payment services and online vehicle protection plans, today announced that they will go public in a business combination with MDH Acquisition Corp. (NYSE:MDH).
The new public company, Olive.com, will be a combination of two proven growth platforms: Olive.com's current digital vehicle protection plan platform and PayLink Direct's current industry leading payment services operation. PayLink Direct, founded in 2006 by CEO Rebecca Howard, has a 15-year track record of profitability and will become a division of Olive.com. The company continues to grow with over 345,000 new customers on the combined platform in 2020 and expects to have approximately 850,000 new customers by 2023.
Upon completion of the business combination, CEO Rebecca Howard will become CEO of the new public company and MDH's Executive Chairman, Franklin McLarty, a proven business builder with deep experience in the automotive and transportation sectors, will become its Chairman. Upon the close of the proposed transaction, the combined company will be named Olive Ventures Holdings, Inc. and be called Olive.com. It will be listed on the NYSE under the ticker symbol "OLV."
With a heritage rooted in America's Heartland, Olive.com will serve the vehicle protection plan needs of customers across the U.S. and Canada. This proposed transaction represents the logical next step in Olive.com's growth journey, providing access to capital to fuel growth, increase long-term profitability and extend its leadership in the payment services and vehicle protection market.
The proposed transaction values Olive.com at an initial pro-forma enterprise value of approximately $960 million. Following the completion of the business combination, the cash in trust and the investment from PIPE investors will allow Olive.com to expand and continue to deliver its product offerings to a growing $260 billion addressable market -- including 280 million total cars on the road today, 87 million of which are between 6-12 years old. Research shows that the average age of a car on the road hit a record high of 12.1 years during the pandemic, with 25% of cars aged 16 years or older. This trend is expected to continue, and an increasingly aged fleet will drive the need for vehicle service and mechanical breakdown coverage. Olive.com provides an essential product for consumers at a time when at least 33% of car owners could not afford $500 to $600 in automotive repairs and 60% would have difficulty covering a $1,000 repair expense.
Strong Investor Alignment of Interests. Olive.com has a strong base of strategic investor support. Both MDH Acquisition Corp. and the strategic investors leading this transaction are strong believers in the significant future growth potential of Olive.com and have taken action to ensure their interests are fully aligned with future shareholders. Olive.com is backed by proven strategic investors including investment funds managed by affiliates of Fortress Investment Group and Milestone Partners. These investors believe in Olive.com's strong growth potential and therefore have agreed to roll forward 100% of their current common equity interests into the new public company. To demonstrate its long-term commitment to generating strong growth at Olive.com, MDH's sponsor has also committed to tie a substantial portion of its equity interests to an earnout based on Olive.com's performance. In addition, Old Republic Insurance and Ally Financial have become strategic partners because they have a strong belief in Olive.com's growth thesis.
Rebecca Howard, Founder and CEO of Olive.com, said, "We are excited about the next phase of our growth journey and could not have found a better suited partner for this public company journey than the exceptional MDH team. We will continue our relentless focus on reaching consumers on their terms, and on serving vehicle owners and our valued business to business clients across the U.S. and Canada with our industry leading sales, marketing and payment solutions. We are growing our business by putting the needs of consumers first and empowering them to find affordable, transparent and user-friendly solutions for vehicle protection plans. I am so honored to lead our team of dedicated professionals who are deeply committed to our values and mission to help consumers find the solutions they need."
Franklin McLarty, Executive Chairman of MDH Acquisition Corp., said, "Earlier this year, we set out to find a profitable company in the U.S. Heartland that had unrecognized value, with room to grow, a world-class management team and leadership in a sector where MDH has deep expertise and relationships. We found each of these attributes in Olive.com. Rebecca and her team have brought a highly differentiated offering to market and have already achieved tremendous success. The team has a significant addressable market and a material opportunity to more efficiently consolidate and service the space for years to come given the market megatrends. Olive.com operates in the automotive industry, an industry where my family has over 100 years of proven leadership experience, and we look forward to leveraging our knowledge and business expertise to support Olive.com's continued growth. I'm honored to become Chairman of this exciting growth company."
David King, Managing Director at Fortress Investment Group, said, "Fortress very early on recognized this company's disruptive potential and powerful consumer value proposition. We've been proud to partner with Olive.com as they have become the unrivaled market leader, and we are strong believers in the company's future growth potential and investment thesis."
Adam Curtin, Partner at Milestone Partners, said, "Milestone is very excited to continue its partnership with management and Fortress in backing Olive.com during this next phase of growth. Since our initial investment in 2014, we have valued and supported Rebecca's vision for the business and entrepreneurial tenacity in providing consumers with best-in-class vehicle protection, affordable payment plans and excellent customer service, all made possible by Olive.com's proprietary technology. We are pleased to add MDH, Old Republic and Ally Financial to the Olive.com family."
Craig R. Smiddy, President & CEO at Old Republic, said, "Old Republic Insured Automotive Services is a market leader in the vehicle service industry. With almost 30 years of experience, we recognize that Rebecca and her team have created powerful and differentiated capabilities that complement our platform. We look forward to strengthening this relationship as we continue to pursue our growth strategy."
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