Lightspeed POS Inc.
Multilateral Instrument 11-102 Passport System and National Instrument 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- BAR -- Exemption from the requirement to file a BAR under Part 8 of National Instrument 51-102 Continuous Disclosure Obligations -- The acquisition is non-significant applying the asset and profit or loss tests; applying the investment test produces an anomalous result because the significance of the acquisition under this test is disproportionate to its significance on an objective basis in comparison to the results of the other significance tests and all other business, commercial and financial factors; the Filer has provided additional measures that demonstrate the non-significance of the acquisition to the Filer and that are generally consistent with the results when applying the asset and profit or loss tests.
Applicable Legislative Provisions
National Instrument 51-102 Continuous Disclosure Obligations, ss. 8.2(1) and 8.3, and Part 13.
February 19, 2020
IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF LIGHTSPEED POS INC. (the Filer)
The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) granting relief pursuant to Part 13 of Regulation 51-102 respecting Continuous Disclosure Obligations, CQLR, c. V-1.1, r. 24 (Regulation 51-102) from the requirement in Part 8 of Regulation 51-102 to file a business acquisition report (BAR) in connection with the Filer's acquisition of Gastrofix GmbH (the Acquired Business) on January 7, 2020 (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
a) the Autorité des marchés financiers is the principal regulator for this application;
b) the Filer has provided notice that Subsection 4.7(1) of Regulation 11-102 respecting Passport System, CQLR, c. V-1.1, r. 1 (Regulation 11-102) is intended to be relied upon in all jurisdictions of Canada other than Ontario; and
c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Terms defined in Regulation 14-101 respecting Definitions, CQLR, c. V-1.1, r. 3, Regulation 11-102 and Regulation 51-102 have the same meaning if used in this decision, unless otherwise defined herein.
This decision is based on the following facts represented by the Filer:
1. The head office of the Filer is located in the province of Québec.
2. The Filer is a reporting issuer in all jurisdictions of Canada and the Filer is not in default of securities legislation in any of those jurisdictions.
3. The Filer's subordinate voting shares are listed for trading on the Toronto Stock Exchange under the ticker symbol "LSPD". The Filer also has outstanding multiple voting shares, the entirety of which are held by DHIDasilva Holdings Inc., an entity controlled by the Filer's Chief Executive Officer.
4. On January 7, 2020, the Corporation announced that it had completed the acquisition of the Acquired Business (the Acquisition) for an aggregate purchase price of $100.6 million, consisting of a cash payment of approximately US$56 million (which amount is net of a US$4.423 million liability assumed through the acquisition) and the issuance of 1,437,930 subordinate voting shares valued at US$30.99 per share (based on the spot price of such shares at the time of closing), all subject to customary post-closing purchase price adjustments. When including the value of all contingent consideration which could become payable to the sellers of the Acquired Business in the event that the Acquired Business over-achieves on certain performance objectives through January 2022 (payable in a combination of cash payments and additional issuances of subordinate voting shares), the aggregate value of the purchase price for Acquisition could reach up to approximately US$123 million.
5. Under Part 8 of Regulation 51-102, the Filer is required to file a BAR for any "significant acquisition" that it completes and such BAR must contain certain financial statements of the acquired business.
6. The Acquisition is not a "significant acquisition" under the "Asset Test" as the consolidated assets of the Acquired Business as of December 31, 2019 represented approximately 1.99% of the consolidated assets of the Filer as of March 31, 2019.
7. The Acquisition is not a "significant acquisition" under the "Profit or Loss Test" as the "specified profit or loss" of the Acquired Business as of December 31, 2019 represented approximately 1.58% of the "specified profit or loss" of the Filer as of March 31, 2019.
8. The Acquisition is a "significant acquisition" under the "Investment Test", as the total consideration proposed to be paid for the Acquired Business represents approximately 48.10% of the consolidated assets of the Filer as of March 31, 2019. As such, as a "significant acquisition", the Acquisition would require the filing of a BAR under the "Investment Test" of Subsection 8.3(2)(b) of Regulation 51-102.
9. The Acquisition would also represent a "significant acquisition" under the optional "Investment Test" or the alternative applications available under subsections 8.3(3) and 8.3(4) of Regulation 51-102.
10. For the purposes of completing its quantitative analysis of the "Asset Test", "Investment Test" and "Profit or Loss Test", the Filer utilized the Acquired Business' financial statements and the Filer's financial statements. The Filer's financial statements were prepared in accordance with International Financial Reporting Standards (IFRS), while the Acquired Business' financial statements were prepared in accordance with German GAAP and subsequently converted to IFRS following the Acquisition.
11. The Filer does not believe (nor did it believe at the time it entered into an agreement with respect to the Acquisition) that the Acquisition is significant to it from a commercial, business, practical or financial perspective.
12. The Filer has provided the principal regulator with additional financial and operational measures, all of which are generally important metrics for the Filer and the industry in which it operates, which further demonstrate the insignificance of the Acquisition to the Filer. These additional financial and operational measures include, notably, revenues and the results of such measures is consistent with the results of the "Asset Test" and the "Profit or Loss Test".
13. The application of the "Investment Test" to the Acquisition produces an anomalous result because the significance of the Acquisition is exaggerated and out of proportion to its significance to the Filer on an objective basis in comparison to the results of the "Asset Test" and the "Profit or Loss Test".
14. The Filer is of the view that the "Asset Test", the "Profit or Loss Test" and these additional financial and operational measures supplied by the Filer more accurately reflect the significance of the Acquisition to the Filer from a commercial, business, practical and financial perspective.
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted.