Epiq E-Discovery Buyout Valued at $1 Billion

In the largest deal this year in the e-Discovery service space, Epiq Systems announced July 27 that it has agreed to a stock purchase buyout by DTI Global in a deal valued at $1 billion.

If approved, the deal would combine two of the largest players in the e-Discovery service provider space. Both Epiq and DTI are large Relativity users, according to kCura.

Under the terms of the deal announced, DTI—backed by the Ontario Municipal Employees Retirement System’s private equity arm and Harvest Partners—will pay $16.50 in cash for Epiq’s shares, a 42 percent premium over its closing price of $11.63 in February when months of speculation that a buyout was in the offing began.

Based in Kansas City, Nasdaq-listed Epiq Systems provides managed e-Discovery services, and also works on claims administration for class actions and bankruptcy cases. DTI is headquartered in Chicago and provides e-Discovery services, court reporting and litigation support. It is majority owned by the Ontario pension system (OMERS).

Neither Epiq nor DTI nor any others involved in the deal were immediately available for comment.

The deal comes two years after Epiq rejected a $20 per share offer from P2 Capital Partners that was pegged at $1.1 billion, and the rejection of which subsequently sparked a shareholder lawsuit. Still, in its current offer, DTI will assume debt, which combined with the stock purchase pushes the value of the deal up to around $1 billion, according to Epiq.

The press release states that the company’s two largest shareholders, P2, and St. Denis J. Villere, the investment fund that filed a shareholder lawsuit this winter claiming the company was “deeply undervalued,” have both agreed to vote their shares in favor of the deal, according to the Epiq press release.

In addition, Tom W. Olofson, founder, chairman and chief executive officer of the company, and the company’s directors and other executive officers “have signed voting support agreements.”

In the press release, John Davenport Jr., founder and chief executive officer of DTI, said the two businesses will be integrated although it made no mention of which brand will survive. In other e-Discovery acquisitions, including Epiq’s 2015 acquisition of Iris Data Services, both companies’ brands have continued.

Kirkland & Ellis advised Epiq in the deal. DTI was advised by Bryan Cave and Weil, Gotshal & Manges, which also advised OMERS Private Equity. White & Case advised Harvest Partners.

Other recent deals in the e-Discovery service space include:

In January, the Carlyle Group and venture capital firm Revolution Growth acquired Virginia-based LDiscovery, based in McLean, Va. for a reported $150 million.

In December 2015, Consilio acquired Huron Legal for $112 million, its third deal after the Los Angeles private equity firm Shamrock Capital Advisors purchased a majority stake in August.

In December 2015, the patent risk management company RPX purchased Inventus Solutions in a $232 million deal.

To contact the reporter on this story: Gabe Friedman in Washington at gfriedman@bna.com

To contact the editor responsible for this story: Casey Sullivan at csullivan@bna.com