WeCommerce to Acquire Archetype Themes

Expands WeCommerce’s Leading Portfolio of Themes Adds Another Strong Growth and Attractive Margin Business to WeCommerce’s Portfolio
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WeCommerce Holdings Ltd. (“WeCommerce” or the “Company”) (TSXV:WE) has signed a definitive purchase agreement to acquire substantially all of the assets of Archetype Themes Inc. (“Archetype”) for US$20 million upfront and contingent consideration of up to US$12 million, the Company announced today. Archetype is a leading designer and developer of premium themes used by over 60,000 Shopify merchants. Its Impulse theme is the #1 ranked theme based on popularity in the Shopify Theme Store.

Archetype will continue to operate as an independent brand post-acquisition. Combined with Pixel Union and Out of the Sandbox, WeCommerce-owned themes will comprise five of the top-seven most popular paid themes in the Shopify Theme Store. This acquisition advances WeCommerce’s strategy to build, acquire and invest in the world’s top Shopify technology businesses.

The upfront consideration represents a multiple of approximately five times EBITDA, based on Archetype’s unaudited financial statements for the trailing twelve months period ended March 31, 2021. WeCommerce expects to fund the upfront consideration through a combination of cash on hand and borrowings under its senior secured credit facility.

“Archetype’s stunning themes portfolio is loved by merchants large and small, helping them attract and convert customers through high performing and thoughtfully designed premium storefronts.” said Chris Sparling, CEO of WeCommerce.

“Archetype has built a top brand in the Shopify partner ecosystem,” Alex Persson, President and Interim Chief Financial Officer added. “In the coming days, all of Archetype’s themes will be updated for Shopify’s Online Store 2.0 architecture, which we believe will unlock further flexibility and value for merchants.”

“We are thrilled to be part of WeCommerce,” said Carson Shold, Co-founder and CTO of Archetype. “WeCommerce has a proven track record of building and growing companies in the Shopify space. WeCommerce’s experience and shared long-term vision of the partner ecosystem made them the clear choice.”

Acquisition Overview

Pursuant to the purchase agreement, WeCommerce has agreed to pay Archetype an aggregate purchase price of up to US$32 million, comprising:

  1. US$20 million payable in cash on closing of the Acquisition; and
  2. an earn-out of up to US$12 million, payable in two installments as follows:
    1. an amount of up to US$4 million, subject to the satisfaction of certain conditions, including Archetype achieving certain EBITDA targets for the six-month period ending December 31, 2021, which may be payable in or around the second quarter of 2022; and
    2. an amount of up to US$8 million, subject to the satisfaction of certain conditions, including Archetype achieving certain EBITDA targets for the twelve-month period ending December 31, 2022, which may be payable in or around the second quarter of 2023.

The earn-out payment may be satisfied, at WeCommerce’s sole discretion, in either cash, the issuance of Class A common shares of WeCommerce (the “Common Shares”) to Archetype at the 10-day volume weighted average trading price of the Common Shares calculated on the day immediately prior to the day of the issuance of such shares, or a combination thereof.

The Acquisition is an arm’s length transaction that is expected to constitute an “expedited acquisition” pursuant to Policy 5.3 of the TSX Venture Exchange and is subject to customary closing conditions, including TSXV approval, receipt of certain third party consents and the other conditions set out in the purchase agreement. Subject to the satisfaction of such conditions, the Acquisition is expected to close within the next 45 days.

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