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NEW YORK and SOMERSET, N.J. - Resolute Holdings I, LP, led by David Cote and Tom Knott, has entered into agreements to acquire a majority interest in CompoSecure, Inc. (NASDAQ: CMPO), a company specializing in metal payment cards and security solutions. The transaction, which involves the purchase of 49.3 million Class A shares from certain CompoSecure shareholders, is expected to close by September 30, 2024.
David Cote, whose investment firm will become the principal shareholder, is set to become the executive chairman of CompoSecure's board. The move aims to simplify the company's corporate structure by eliminating its dual-class share system, a change that is anticipated to enhance shareholder value and alignment.
CompoSecure's current CEO, Jon Wilk, welcomed the development, citing David Cote's proven track record in global organizations like Honeywell (NASDAQ:HON) and Vertiv as a valuable asset for the company's growth and shareholder value creation. Mitchell Hollin of LLR Partners, a long-term Class B stockholder, expressed confidence in CompoSecure's market leadership and its future prospects under the new partnership.
The transaction will result in the David Cote Family gaining voting control of approximately 60% of CompoSecure's total shares outstanding. The company's management team is expected to remain in place, with the board expanding to eleven members, including a majority of independent directors.
Goldman Sachs & Co. LLC and Paul, Weiss, Rifkind, Wharton & Garrison LLP are advising Resolute on the financial and legal aspects, respectively. A special committee of independent directors at CompoSecure, with advice from Potter Anderson & Corroon LLP and Houlihan Lokey (NYSE:HLI), Inc., has unanimously approved the transactions.
In other recent news, CompoSecure, Inc. has reported a robust Q1 with a 9% increase in net sales, hitting a record $104 million. This success was primarily driven by the company's expanding domestic business and the launch of several new metal card programs, including the Robinhood (NASDAQ:HOOD) Gold Card. CompoSecure also confirmed its full-year guidance, projecting net sales between $408 million and $428 million, and adjusted EBITDA ranging from $147 million to $157 million.
In addition to these developments, CompoSecure announced a partnership with Robinhood Markets , Inc., and Fiserv (NYSE:FI) to produce the Robinhood Gold Card. This innovative payment card combines the features of a starter card and a premium metal card, offering advanced rewards and enhanced security features.
Furthermore, CompoSecure disclosed the pricing of a secondary stock offering by certain shareholders, with the aim of raising gross proceeds of $45.5 million. The offering includes 7 million shares of Class A common stock at $6.50 each and is scheduled to close in 2024.
InvestingPro Insights
As CompoSecure, Inc. (NASDAQ: CMPO) prepares for a significant transition in its ownership structure, investors are closely monitoring the company's financial health and market potential. The agreement led by David Cote to acquire a majority interest in CompoSecure could be a transformative move for the company, especially considering its current financial metrics and market performance.
InvestingPro data highlights CompoSecure's solid financial footing with a market capitalization of $605.24 million and a P/E ratio standing at 6.92, which suggests the company is trading at a reasonable valuation relative to its earnings. Further analysis of the last twelve months leading up to Q1 2024 reveals a PEG ratio of 0.36, indicating potential undervaluation given the company's earnings growth prospects.
Moreover, CompoSecure has demonstrated a strong gross profit margin of 52.82%, underscoring its ability to maintain profitability in its operations. This financial resilience is further supported by the company's robust return on assets, which reached 59.53% in the same period, reflecting efficient asset utilization.
InvestingPro Tips also shed light on the company's outlook and market sentiment. Analysts predict CompoSecure will be profitable this year, and the company is trading at a low P/E ratio relative to near-term earnings growth, suggesting an attractive investment opportunity. Additionally, the company has seen a large price uptick over the last six months, with a six-month price total return of 67.43%, indicating strong investor confidence.
Interested investors can find more in-depth analysis and an additional 9 InvestingPro Tips for CompoSecure at: https://www.investing.com/pro/CMPO, providing a comprehensive view of the company's financial health and market potential.
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