CynergisTek announces it has entered into a definitive agreement to be acquired by Clearwater Compliance LLC, a healthcare focused cybersecurity, compliance, and risk management solutions firm, in an all cash transaction that values CynergisTek at approximately $17.7 million.
Clearwater is a portfolio company of funds affiliated with Altaris Capital Partners, LLC, an investment firm focused exclusively on the healthcare industry.
Under the terms of the merger agreement, CynergisTek stockholders will receive $1.25 per share in cash, representing a premium of approximately 112% over CynergisTek’s closing share price on May 20, 2022, the last full trading day prior to the transaction announcement, and a premium of approximately 48% over CynergisTek’s one-month volume-weighted average closing price through May 20, 2022.
Upon completion of the transaction, CynergisTek will become a privately held subsidiary of Clearwater, and CynergisTek shares will no longer be listed on any public market. CynergisTek and Clearwater will partner together to further accelerate their shared missions of delivering health cybersecurity, privacy and audit services.
“Today’s announcement is a testament to the strength of CynergisTek’s people-centric approach to cybersecurity, privacy and audit and our important role in serving healthcare and our many other clients,” said Mac McMillan, President and CEO of CynergisTek Inc. “We have made tremendous strides in expanding our service offerings over the years. We believe that merging Clearwater and CynergisTek as a private company, will allow the combined entity to be more agile with greater flexibility to continue investing in innovation with the opportunity to scale as a Managed Service Provider (MSP) expanding and enhancing its service portfolio.
“Many industries, not just Healthcare, are turning to MSPs for the support and expertise they need to meet today’s cyber threats. Building on our combined leadership position we’ll be able to create a more valuable platform for the industry and our clients. This is an exciting new chapter for CynergisTek that would not have been possible without our employees’ hard work and commitment to our customers, partners, investors and each other.”
“CynergisTek is an industry leader in healthcare cybersecurity, privacy and audit, supporting a large enterprise customer base,” said Steve Cagle, Chief Executive Officer of Clearwater. “The combination of our companies will result in a comprehensive portfolio of solutions that add significant value for our customers and for the healthcare industry. We are incredibly excited to bring together two of the top healthcare focused cybersecurity companies and look forward to working hand in hand with colleagues at CynergisTek to support our customers and proactively address their growing cybersecurity and compliance needs.”
CynergisTek’s Board of Directors (the “Board”) has unanimously approved the merger agreement with Clearwater and recommends that CynergisTek stockholders vote in favor of the proposed merger and the merger agreement. CynergisTek expects to hold a Special Meeting of Stockholders to consider and vote on the proposed merger and the merger agreement as soon as practicable after the mailing of the proxy statement to its stockholders.
The merger agreement includes a 30-day period expiring June 21, 2022 (and in certain cases 35 days, expiring June 26, 2022), which allows CynergisTek and its advisors to actively solicit, initiate, encourage or facilitate superior acquisition proposals from third parties. In accordance with the merger agreement, the Board, with the assistance of its advisors, intends to solicit superior proposals during this period. In addition, CynergisTek may, at any time, subject to the provisions of the merger agreement, respond to unsolicited proposals that are reasonably likely to result in a superior proposal.
CynergisTek will have the right to terminate the merger agreement with Clearwater to enter into a superior proposal subject to the terms and conditions of the merger agreement, including payment of a termination fee to Clearwater in connection with such termination. There can be no assurance that the solicitation process will result in a superior proposal or that any other transaction will be approved or completed, and CynergisTek does not intend to disclose developments with respect to the solicitation process unless and until the Board determines such disclosure is appropriate or otherwise required.
The transaction is expected to close in the third quarter of 2022, subject to customary closing conditions, including approval by CynergisTek stockholders. CynergisTek will continue to be headquartered in Austin, Texas.
Mac McMillan, CEO and Co-Founder of CynergisTek, and Paul Anthony, CFO of CynergisTek, have entered into voting agreements pursuant to which they have agreed, among other things, to vote their shares of CynergisTek common stock in favor of the merger.
Craig-Hallum Capital Group LLC is providing a fairness opinion with respect to the transaction to the Board. American Growth Capital is acting as exclusive financial advisor to CynergisTek, with Kirton McConkie PC acting as CynergisTek’s legal counsel. ArentFox Schiff LLP is acting as legal counsel to Clearwater.