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(All figures referenced in Canadian dollars, except where noted)
- Merger forms a technology-forward loyalty solutions leader well positioned to redefine the loyalty industry
- Transaction expected to create a company with significant global scale, provide strong business synergies, and enhance path to profitability for the combined business
- New entity combines Aimia Loyalty Solutions’s world-class client roster and full-suite offering with Kognitiv’s groundbreaking platform that processed $1.3 billion in transactions last year
- Tech-savvy leadership team with loyalty expertise overseen by a highly skilled board of directors
- Transaction expected to close before the end of May 2020
TORONTO, April 29, 2020 /PRNewswire/ – Aimia Inc. (TSX: AIM) and Kognitiv Corporation announce that they have entered into an agreement to merge Aimia’s Loyalty Solutions business with Kognitiv Corporation. The merger creates a new and transformative technology and loyalty solutions company that redefines how loyalty programs, merchants, and consumer brands interact to enrich member engagement, enhance consumer loyalty and deliver stronger yields to the businesses it serves.
Concurrent with the merger, Aimia Inc. and Kognitiv Corporation investors will receive Convertible Preferred Shares in the newly merged Kognitiv Corporation, in consideration for contributing approximately $35.3 million in cash. Proceeds from the Convertible Preferred Shares financing will fund the newly merged company to position it to deliver growth and reach profitability.
Aimia Inc. Interim CEO and Board member, Phil Mittleman, commented: “We have completed a successful turnaround in the Loyalty Solutions business, which was poised to be EBITDA positive this year on a stand alone basis. Aimia was presented with an exciting opportunity in Kognitiv, whose proprietary AI, peer-to-peer technology allows their partners to distribute and apply rewards via the Loyalty Capital Network to maximize yield and consumer lifetime value. The decision to merge the businesses, each gaining traction in different markets with strong cost and business synergies, represents an outstanding opportunity and highlights the significant value that has been created in the Loyalty Solutions business, while greatly simplifying Aimia’s corporate structure. Kognitiv’s extensive investment in technology will enhance and further enable the Loyalty Solutions platform, and represents a significant acceleration of our combined business models which are fully funded, with the potential to become EBITDA and cash flow positive in 2021, with accelerating growth in that period and beyond that far exceeds our previous internal guidance for our loyalty services division. Importantly, Kognitiv’s management and board of directors bring an invaluable array of talent and business acumen to the newly merged entity. This transaction is structured similarly to our highly successful investment in Cardlytics (Nasdaq: CDLX), where Aimia contributed certain IP, international operating expertise and board presence along with funding, into an early-stage tech-forward company, which was subsequently brought public in an IPO. We believe this merged entity has the potential for a monetization event that would provide a similar positive outcome”.
Executive Chairman & Founder of Kognitiv Corporation, Peter Schwartz, said “Kognitiv Corporation is incredibly excited by this merger with Aimia. While the world is gripped by this terrible pandemic, businesses are looking for partners who can accelerate their recovery when the time is right. Consumers are looking to the brands that they trust, and are loyal to, to provide them some relief as well. I strongly believe that the transformative business created by the merging of Aimia’s rich loyalty heritage and Kognitiv’s unique peer-to-peer collaborative business model can provide some of those answers for both customers and their consumers. Our transformative business will drive improved yield for our customers, richer rewards for their consumers and create a genuine personalized relationship between them that will truly deepen loyalty. We plan to redefine the loyalty market and, with this unique combination of expertise, customer relationships and business model, we’re confident we can do just that”.
Strategic Rationale
The merger of Aimia’s Loyalty Solutions and Kognitiv Corporation creates a visionary leader that is well positioned to redefine the loyalty industry.
The merged entity creates a technology-forward loyalty solutions provider by combining Aimia Loyalty’s world-class client roster and strong base of over 200 million consumer profiles with the enhanced capabilities of Kognitiv’s transformative loyalty platform which processed over $1.3 billion in transactions last year and serves asset owners globally including hotels, airlines, and car rental companies and is connected to more than 20 loyalty partners.
With complementary front and back end capabilities that extends Loyalty Solutions’ full suite offering paired with Kognitiv’s extensive technology investments in a transformative peer-to-peer loyalty platform called the Loyalty Capital Network, this solution allows businesses and brands to improve yield for asset owners and create distinct rewards that drive deeper consumer loyalty to increase revenue for clients.
The combined business is expected to result in significant global scale, provide strong business synergies and enhance the path to profitability.
Details of Transaction…
