On August 25, 2017, Diversified Royalty Corp. (“DIV”) acquired the Canadian AIR MILES® trademarks and certain related Canadian intellectual property rights (collectively, the “AIR MILES® Program”) from a subsidiary of Aimia Inc. for $53.75 million plus additional contingent consideration of up to $13.75 million (the “Acquisition”). DIV will receive an aggregate royalty, payable quarterly, equal to 1% of gross billings from the AIR MILES® Program in Canada in accordance with the terms of two license agreements acquired by DIV as part of the Acquisition.
DIV completed the Acquisition with cash on hand and refinanced a portion of the purchase price on September 6, 2017 upon entering into a credit agreement with a Canadian chartered bank for a senior credit facility comprised of a term loan facility of $17.4 million and a revolving facility of $3 million.
AIR MILES® is Canada’s largest coalition loyalty program with over 170 brand name sponsors.
DIV is a multi-royalty corporation, engaged in the business of acquiring top-line royalties from well-managed multi-location businesses and franchisors in North America. DIV’s objective is to acquire predictable, growing royalty streams from a diverse group of multi-location businesses and franchisors. In addition to the AIR MILES® Program, DIV currently owns the Sutton and Mr. Lube trademarks. Sutton is among the leading residential real estate brokerage franchisor businesses in Canada with approximately 8,000 agents and over 200 offices across Canada. Mr. Lube is the leading quick lube service business in Canada with 170 locations across Canada and over $200 million of annual system sales.
DIV was represented on the Acquisition and related debt financing by a Farris transaction team led by Bradley A. Newby that included David J. Selley (banking), James P. Hatton (intellectual property), Robert Veitch and Jeff Hart.