CompoSecure plans to spin-off Resolute Holdings, distributing shares to shareholders, with an emphasis on value-enhancing acquisitions.
Quiver AI Summary
CompoSecure, Inc. announced its plan to spin-off a new subsidiary, Resolute Holdings Management, Inc., which will focus on capital allocation, operational practices, and M&A strategies to enhance value for CompoSecure. Existing shareholders will receive shares of Resolute Holdings on a pro rata basis, leading to a taxable gain for both CompoSecure and its shareholders. David Cote will serve as Executive Chairman and Tom Knott as CEO of Resolute Holdings. The spin-off is expected to be completed in the first quarter of 2025, subject to regulatory approvals. Resolute Holdings may experience limited profitability in its first fiscal year as it builds its operational framework. Goldman Sachs and Paul, Weiss are advising CompoSecure on the transaction.
Potential Positives
- CompoSecure is spinning off a newly formed subsidiary, Resolute Holdings, which aims to enhance value-accretive acquisitions for the company.
- The pro rata distribution of shares in Resolute Holdings to existing CompoSecure shareholders allows them to benefit directly from potential growth opportunities associated with the new entity.
- David Cote and Tom Knott's leadership positions in Resolute Holdings bring experienced management to oversee capital allocation and operational strategies, potentially driving future growth.
- The planned spin-off is expected to be completed in the first quarter of 2025, setting a clear timeline for stakeholders regarding future developments and business structure.
Potential Negatives
- Transaction is expected to be taxable for both CompoSecure and all existing shareholders, which may lead to a negative financial impact for investors.
- Resolute Holdings is expected to have limited profitability in FY2025, suggesting potential challenges in its establishment and operations.
- The completion of the spin-off is subject to customary conditions and final approval, introducing uncertainty and the possibility of delays.
FAQ
What is the purpose of the CompoSecure spin-off?
The spin-off aims to accelerate value-enhancing acquisitions for CompoSecure through the creation of Resolute Holdings.
Who will lead Resolute Holdings after the spin-off?
David Cote will be the Executive Chairman, and Tom Knott will serve as CEO of Resolute Holdings.
Will existing shareholders receive shares of Resolute Holdings?
Yes, all existing shareholders of CompoSecure will receive shares in Resolute Holdings on a pro rata basis.
What are the tax implications of the spin-off?
The spin-off is expected to be taxable for CompoSecure and treated as a taxable dividend for shareholders.
When is the spin-off of Resolute Holdings expected to be completed?
The spin-off is currently anticipated to be completed during the first quarter of 2025.
Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.
$CMPO Insider Trading Activity
$CMPO insiders have traded $CMPO stock on the open market 25 times in the past 6 months. Of those trades, 0 have been purchases and 25 have been sales.
Here’s a breakdown of recent trading of $CMPO stock by insiders over the last 6 months:
- ADAM JOSEPH LOWE (Chief Product & Innov. Officer) has traded it 11 times. They made 0 purchases and 11 sales, selling 272,450 shares.
- GREGOIRE MAES (Chief Operating Officer) has traded it 5 times. They made 0 purchases and 5 sales, selling 180,000 shares.
- MICHELE LOGAN has traded it 3 times. They made 0 purchases and 3 sales, selling 16,596,214 shares.
- EQUITY PARTNERS IV, L.P. LLR sold 29,774,258 shares.
- JONATHAN WILK (President and CEO) sold 618,014 shares.
- TIMOTHY WALTER FITZSIMMONS (Chief Financial Officer) has traded it 2 times. They made 0 purchases and 2 sales, selling 100,000 shares.
- AMANDA MANDY GOURBAULT (Chief Revenue Officer) has traded it 2 times. They made 0 purchases and 2 sales, selling 145,256 shares.
To track insider transactions, check out Quiver Quantitative's insider trading dashboard.
$CMPO Hedge Fund Activity
We have seen 106 institutional investors add shares of $CMPO stock to their portfolio, and 38 decrease their positions in their most recent quarter.
Here are some of the largest recent moves:
- LOCUST WOOD CAPITAL ADVISERS, LLC added 3,844,941 shares (+inf%) to their portfolio in Q3 2024
- TYRO CAPITAL MANAGEMENT LLC added 1,995,610 shares (+inf%) to their portfolio in Q3 2024
- WELLINGTON MANAGEMENT GROUP LLP removed 1,420,361 shares (-43.8%) from their portfolio in Q3 2024
- ARROWSTREET CAPITAL, LIMITED PARTNERSHIP added 972,779 shares (+329.1%) to their portfolio in Q3 2024
- PROSPECT CAPITAL ADVISORS, LLC added 855,000 shares (+inf%) to their portfolio in Q3 2024
- WESTERN STANDARD LLC removed 828,073 shares (-100.0%) from their portfolio in Q3 2024
- ZUCKERMAN INVESTMENT GROUP, LLC added 824,349 shares (+inf%) to their portfolio in Q3 2024
To track hedge funds' stock portfolios, check out Quiver Quantitative's institutional holdings dashboard.
Full Release
CompoSecure to enter into a Management Agreement with Resolute Holdings
Pro rata distribution of shares in Resolute Holdings to all existing shareholders of CompoSecure
Spin-off designed to accelerate value enhancing acquisitions for CompoSecure
David Cote will be Executive Chairman and Tom Knott will be CEO of Resolute Holdings
Transaction is expected to be taxable for both CompoSecure and all existing shareholders
Resolute Holdings expected to have limited profitability in FY2025
SOMERSET, N.J., Dec. 30, 2024 (GLOBE NEWSWIRE) -- CompoSecure, Inc. (Nasdaq: CMPO), a leader in metal payment cards, security, and authentication solutions, today announced its intention to spin-off a newly formed subsidiary called Resolute Holdings Management, Inc. (“Resolute Holdings”). The investment team at CompoSecure, and their associated costs, will move to Resolute Holdings upon completion of the spin-off.
As part of the spin-off transaction, a wholly owned subsidiary of CompoSecure, CompoSecure Holdings, L.L.C., will enter into a Management Agreement with Resolute Holdings under which CompoSecure Holdings, L.L.C. will pay Resolute Holdings a quarterly management fee in cash equal to 2.5% of CompoSecure’s Latest Twelve Months’ Adjusted EBITDA
1
. Resolute Holdings will be responsible for providing CompoSecure’s business with certain services, including providing oversight of its capital allocation strategy, operational practices, as well as M&A sourcing and execution. The acquisition strategy will focus on bolt-on targets adjacent to CompoSecure’s current operating business as well as larger targets that diversify the current business and customer mix.
CompoSecure’s existing management team, led by President and CEO Jon Wilk, will continue to operate the day-to-day business and deliver for our customers around the world while leveraging the CompoSecure Operating System to drive revenue growth and profitability.
The spin-off of Resolute Holdings will be on a pro rata basis to all existing shareholders of CompoSecure, meaning each existing shareholder will receive an allocation of shares in Resolute Holdings proportional to their current ownership in CompoSecure. The distribution of shares in Resolute Holdings will give rise to a taxable gain to CompoSecure and will be treated as a taxable dividend to all existing shareholders for U.S. federal and applicable state and local tax purposes.
Resolute Holdings anticipates limited profitability in fiscal year 2025 as it establishes operations and builds out infrastructure, including adding to its investment and operating team. These investments are designed to facilitate the acceleration of organic and value enhancing inorganic growth at CompoSecure.
Resolute Holdings will be led by David Cote as Executive Chairman of the Board of Directors and Tom Knott as Chief Executive Officer. In addition to David Cote and Tom Knott, the Board of Directors will include John Cote, Joseph DeAngelo, Roger Fradin, Paul Galant, Brian Hughes, Mark James, Krishna Mikkilineni, and Jane Thompson. Resolute Holdings is expected to trade under the ticker “RHLD” on Nasdaq following completion of the spin-off.
Goldman Sachs & Co. LLC is serving as financial advisor to CompoSecure, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal advisor.
The spin-off is subject to customary conditions, including the effectiveness of Form 10 registration with the Securities and Exchange Commission and final approval by CompoSecure’s Board of Directors. The spin-off is currently expected to be completed during the first quarter of 2025.
1) For purposes of the management fee, Adjusted EBITDA, as further defined in the Management Agreement, represents CompoSecure’s historical Adjusted EBITDA methodology, less stock-based compensation expense.
About CompoSecure
Founded in 2000, CompoSecure (Nasdaq: CMPO) is a technology partner to market leaders, fintech’s and consumers enabling trust for millions of people around the globe. The company combines elegance, simplicity and security to deliver exceptional experiences and peace of mind in the physical and digital world. CompoSecure’s innovative payment card technology and metal cards with Arculus security and authentication capabilities deliver unique, premium branded experiences, enable people to access and use their financial and digital assets, and ensure trust at the point of a transaction. For more information, please visit www.CompoSecure.com and www.GetArculus.com.
About Resolute Holdings Management, Inc.
Resolute Holdings Management, Inc. (“Resolute Holdings”) is a newly formed subsidiary of CompoSecure that is expected to be spun-off into a separate publicly traded company. Resolute Holdings is an alternative asset management platform led by David Cote and Tom Knott that will provide operating management services including the oversight of capital allocation strategy, operational practices, and M&A sourcing and execution at CompoSecure and other managed businesses in the future. Resolute Holdings brings a differentiated approach to long-term value creation through the systematic deployment of the Resolute Operating System, which will create value at both the underlying managed businesses and at Resolute Holdings. For additional information on Resolute Holdings, please refer to the recently filed Form 10.
Resolute Holdings Management, Inc. is a distinct entity from Resolute Holdings I, L.P., which acquired CompoSecure shares in September 2024.
Forward-Looking Statements
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management. Although CompoSecure believes that its plans, intentions, and expectations reflected in or suggested by these forward-looking statements are reasonable, CompoSecure cannot assure you that it will achieve or realize these plans, intentions, or expectations. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. Generally, statements that are not historical facts, including statements concerning the planned spin-off of Resolute Holdings, the anticipated impacts of the spin-off, CompoSecure’s possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. In some instances, these statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or the negatives of these terms or variations of them or similar terminology. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. You should understand that the following important factors, among others, could cause actual results or other outcomes to differ materially from those expressed or implied in these forward-looking statements: the ability of CompoSecure to effect the spin-off described above and to meet the conditions related thereto; potential uncertainty during the pendency of the spin-off that could affect CompoSecure’s financial performance; the possibility that the spin-off will not be completed within the anticipated time period or at all; the possibility that the spin-off will not achieve its intended benefits; the ability of Resolute Holdings to successfully execute its plans and strategies, including with respect to M&A; the possibility of disruption, including changes to existing business relationships, disputes, litigation or unanticipated costs in connection with the spin-off; uncertainty of the expected financial performance of CompoSecure or Resolute Holdings following completion of the spin-off; negative effects of the announcement or pendency of the spin-off on the market price of CompoSecure’s securities and/or on the financial performance of CompoSecure; evolving legal, regulatory and tax regimes; actions by third parties, including government agencies; the ability of CompoSecure to diversify its business and customer base and to achieve enhancements in organic growth and operational efficiency, including for any future managed companies; the ability of CompoSecure to create value for its shareholders and generate robust free cash flow; the ability of CompoSecure to grow and manage growth profitably, maintain relationships with customers, compete within its industry and retain its key employees; the possibility that CompoSecure may be adversely impacted by other global economic, business, competitive and/or other factors; the outcome of any legal proceedings that may be instituted against CompoSecure or others; future exchange and interest rates; and other risks and uncertainties, including those under “Risk Factors” in filings that have been made or will be made with the Securities and Exchange Commission. CompoSecure undertakes no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Contacts
For Resolute Holdings
info@resoluteholdings.com
For CompoSecure
Corporate Contact
Anthony Piniella
Head of Communications, CompoSecure
(917) 208-7724
apiniella@composecure.com
Investor Relations Contact
Sean Mansouri, CFA
Elevate IR
(720) 330-2829
CMPO@elevate-ir.com
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
