UPDATE FRIDAY, OCT. 2 8 a.m. EDT
As expected, U.K.-based HH Global Group completed the acquisition of Chicago-headquartered Top 40 promotional products distributor InnerWorkings (asi/168860) on Thursday, Oct. 1. The combined organization will be led by Robert MacMillan, chairman and CEO of HH Global, together with experienced senior managers from both companies. As a result of the completion of the transaction, shares of InnerWorkings’ common stock were removed from listing on the Nasdaq Stock Market, with trading in InnerWorkings shares suspended prior to the opening of business on Oct. 1.

InnerWorkings (asi/168860), the 16th largest distributor by revenue in the North American promotional products industry, is poised to be acquired by HH Global Group, a marketing company headquartered in the United Kingdom that focuses on solutions that include print and point-of-sale.

Shareholders for publicly-traded InnerWorkings approved the pending transaction in a vote on Thursday, Sept. 24. Announced Friday, Sept. 25 and expected to close Thursday, Oct. 1, the deal will see Chicago-based InnerWorkings become a wholly owned subsidiary of HH Global.

Rich Stoddart, CEO, InnerWorkings

According to the companies, HH Global will acquire InnerWorkings for $3 per share in an all-cash transaction that’s approximately $177 million in equity value. This represents a premium of 127% to the closing price, and a premium of 104% to the 90-day volume weighted average price as of July 15, 2020. The transaction has been unanimously approved by both companies’ boards of directors.

Executives described the acquisition as a smart strategic move for InnerWorkings and HH Global. They said the companies offer complementary services and capabilities, and that the combination of the two will create a global marketing powerhouse, given InnerWorkings’ position in North America and HH Global’s robust presence in EMEA and APAC (the company operates in 44 countries). Lower costs and improved brand consistency across marketing channels that range from promotional products to print and point-of-sale will result for clients, the companies maintained.

Robert MacMillan, CEO of HH Global Group, has led the firm since 2003.

Notably, the firms said that there’ll be money to invest to help power potential improvements. The capital will come, in part, from funds that are managed or advised by Blackstone Tactical Opportunities, a global investment firm with offices in North America, Asia and Europe. Blackstone is a current strategic minority equity investor in HH Global.

InnerWorkings has hit hard times in recent years. Those struggles include a sales decline and a more than $76 million net income loss in 2018. While things improved a bit in 2019, with total global revenue across all business channels (promo and others) climbing 3%, the company still experienced a net loss of about $10 million.

When the coronavirus pandemic struck, triggering a recession that sent North American promo product distributors’ collective sales plummeting by 44.4% in the second quarter of 2020, the challenges intensified for InnerWorkings.

“Over the past several months, we’ve been taking actions to put InnerWorkings in the best position to weather the challenging environment in which we’re operating,” InnerWorkings CEO Rich Stoddart said in a statement.

He continued: “In these times of significant economic uncertainty, the Board of Directors and management determined to undertake a comprehensive process to preserve and enhance value for shareholders. After exploring a range of financing and strategic alternatives, and implementing meaningful cost saving measures in response to the COVID-19 pandemic, we’re confident this combination (with HH Global) represents the best path forward for our shareholders and InnerWorkings. In addition to delivering an immediate cash premium to our shareholders, the combination will create a company with a stronger balance sheet and will enhance our ability to accelerate our transformation and serve our client base.”

Robert MacMillan, chairman and CEO of HH Global, said making InnerWorkings a wholly owned subsidiary “accelerates our ability to execute on the next phase of our strategy by broadening our service offering and expanding our global reach…We are confident that together we will create an even stronger company.”

With estimated 2019 North American promotional product revenue of $149.3 million, InnerWorkings ranked 16th on Counselor’s most recent list of the largest distributors in the industry.

Founded in 1991, HH Global executives describe the company as a “global outsourced marketing execution provider. Applying proven processes, industry-leading technology, and the deep expertise of over 1,300+ employees, we develop innovative solutions that drive down the cost of our clients’ physical marketing procurement and content development, while improving quality, sustainability, and speed to market.”

CEO MacMillan has been with the company since 1995. He started in production, rose to sales director and ultimately took control in 2003 following a management buyout. Prior to his business career, he was a professional soccer player for English teams Southampton and Fulham.