Item 1.01. Entry into a Material Definitive Agreement.
Merger Agreement
On July 25, 2021, Medallia, Inc. ("Medallia") entered into an Agreement and Plan
of Merger (the "Merger Agreement") with Project Metal Parent, LLC ("Parent") and
Project Metal Merger Sub, Inc. ("Merger Sub"). The Merger Agreement provides
that, subject to the terms and conditions set forth in the Merger Agreement,
Merger Sub will merge with and into Medallia (the "Merger"), with Medallia
surviving the Merger and becoming a wholly owned subsidiary of Parent (the
"Surviving Corporation"). Parent and Merger Sub are affiliated with Thoma Bravo,
L.P. ("Thoma Bravo").
Medallia's Board of Directors (the "Board") unanimously determined that the
transactions contemplated by the Merger Agreement, including the Merger, are in
the best interests of Medallia and its stockholders, and approved the Merger
Agreement and the transactions contemplated by the Merger Agreement. The Board
also unanimously resolved to recommend that Medallia's stockholders vote to
adopt and approve the Merger Agreement and the Merger.
Under the Merger Agreement, at the effective time of the Merger, each issued and
outstanding share of Medallia's common stock (other than shares (1) held by
Medallia as treasury stock; (2) owned by Parent or Merger Sub; (3) owned by any
direct or indirect wholly owned subsidiary of Parent or Merger Sub; or (4) held
by stockholders who have neither voted in favor of the adoption of the Merger
Agreement nor consented thereto in writing and properly and validly exercised
their statutory rights of appraisal under Delaware law) will be canceled and
extinguished and automatically converted into the right to receive cash in an
amount equal to $34.00, without interest (the "Per Share Price").
At the effective time of the Merger, Medallia's equity-based awards will be
treated in the following manner:
• Each outstanding equity-based award, to the extent then vested, will
be canceled and converted into a right to receive an amount in cash,
without interest, equal to the product obtained by multiplying (1) the
amount of the Per Share Price by (2) the total number of shares of
Medallia's common stock then subject to the then-vested portion of
such equity-based award.
• Each outstanding equity-based award, to the extent not then vested,
will be canceled and converted into a right to receive an amount in
cash, without interest, equal to the product obtained by multiplying
(1) the amount of the Per Share Price by (2) the total number of
shares of Medallia's common stock subject to the then-unvested portion
of such equity-based award. Such cash amount will, subject to the
holder's continued service with Parent and its affiliates (including
Medallia) through the applicable vesting dates, vest and be payable in
accordance with the existing vesting schedule of such equity-based
award (except that, with respect to any equity-based award that,
immediately prior to the effective time of the Merger, remains subject
to performance vesting conditions, the performance metrics of such
award shall be deemed achieved in accordance with an agreed-upon
schedule (which, generally speaking, will reflect the actual level of
achievement of the award's performance metrics), and the applicable
cash amount shall vest at the end of the award's applicable service
period, subject to the holder's continued service through such date).
--------------------------------------------------------------------------------
At the effective time of the Merger, Medallia's stock options will be treated in
the following manner:
• Each outstanding stock option, to the extent then vested, will be
canceled and converted into a right to receive an amount in cash,
without interest, equal to the product obtained by multiplying (1) the
amount of the Per Share Price (less the exercise price per share
attributable to such stock option) by (2) the total number of shares
of Medallia's common stock issuable upon exercise in full of such
stock option.
• Each outstanding stock option, to the extent not then vested, will be
canceled and converted into a right to receive an amount in cash,
without interest, equal to the product obtained by multiplying (1) the
amount of the Per Share Price (less the exercise price per share
attributable to such stock option) by (2) the total number of shares
of Medallia's common stock issuable upon exercise in full of the
then-unvested portion of such stock option. Such cash amount will,
subject to the holder's continued service with Parent and its
affiliates (including Medallia) through the applicable vesting dates,
vest and be payable in accordance with the existing vesting schedule
of such stock option.
• Any stock option, whether vested or unvested, for which the exercise
price per share attributable to such stock option is equal to or
greater than the Per Share Price will be canceled without any cash
payment being made in respect thereof.
Consummation of the Merger is subject to the satisfaction or waiver of customary
closing conditions, including: (1) approval of the Merger Agreement by
Medallia's stockholders; (2) the absence of any law or order restraining,
enjoining or otherwise prohibiting the Merger; and (3) the expiration or
termination of the waiting period under the United States Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and clearance under the
antitrust laws of certain non-United States jurisdictions.
Pursuant to the terms of a "go-shop" provision in the Merger Agreement, during
the period beginning on the date of the Merger Agreement and ending at 12:01
a.m. on September 4, 2021 (such applicable date, the "No-Shop Period Start
Date"), Medallia, its subsidiaries and their respective representatives may:
(1) initiate, solicit, propose, induce or encourage any alternative acquisition
proposals from third parties; (2) provide nonpublic information to such third
parties; and (3) participate in discussions and negotiations with such third
parties regarding alternative acquisition proposals. Beginning on the No-Shop
Period Start Date, Medallia will become subject to customary "no-shop"
restrictions on its ability (and the ability of its subsidiaries and
representatives), except as permitted by the Merger Agreement, to (1) solicit,
initiate, propose or induce the making or knowingly encourage alternative
acquisition proposals from third parties; and (2) provide nonpublic information
to, or participate in discussions or negotiations with, third parties regarding
alternative acquisition proposals.
Medallia made customary representations, warranties and covenants for the
benefit of Parent and Merger Sub in the Merger Agreement. Each of Parent and
Merger Sub also made customary representations, warranties and covenants for the
benefit of Medallia in the Merger Agreement.
The Merger Agreement contains certain termination rights for Medallia and
Parent. Upon termination of the Merger Agreement under specified circumstances,
Medallia will be required to pay Parent a termination fee of $191,110,000.
Specifically, this termination fee is payable by Medallia to Parent if the
Merger Agreement is terminated by (1) Parent following the Board's determination
to change its recommendation with respect to the Merger; (2) Parent following
Medallia's breach or failure to perform, in accordance with the Merger
Agreement, in any material respect certain of its obligations in respect of the
alternative acquisition solicitation provisions in the Merger Agreement; or
(3) Medallia following the decision by the Board to authorize the acceptance of
a superior proposal. However, if, prior to the No-Shop Period Start Date,
Medallia terminates the Merger Agreement to enter into a definitive agreement
with respect to a superior proposal with an Excluded Party (as such term is
defined in the Merger Agreement), then the amount of the termination fee payable
to Parent will be $95,550,000. The termination fee will also be payable in
certain circumstances if (1) the Merger Agreement is terminated
--------------------------------------------------------------------------------
because (a) the Merger is not completed by January 22, 2022, (b) of Medallia's
failure to obtain the required approval of its stockholders or (c) of a material
breach of Medallia's representations, warranties or covenants in a manner that
would cause the related closing conditions to not be satisfied; (2) prior to
such termination (but after the date of the Merger Agreement) a proposal,
generally speaking, to acquire at least 50 percent of Medallia's stock or assets
is publicly announced or disclosed by a third party; and (3) Medallia
subsequently enters into a definitive agreement providing for a transaction
involving the acquisition of at least 50 percent of its stock or assets within
one year of such termination and such transaction is ultimately consummated.
Upon termination of the Merger Agreement under other specified circumstances,
Parent will be required to pay Medallia a termination fee of $382,220,000.
Specifically, this termination fee is payable by Parent to Medallia if the
Merger Agreement is terminated by Medallia following (1) Parent's failure to
consummate the Merger as required pursuant to, and in the circumstances
specified in, the Merger Agreement; or (2) Parent or Merger Sub's material
breach of its representations, warranties or covenants in a manner that would
cause the related closing conditions to not be satisfied. However this
termination fee will be increased to $445,920,000 if (1) the closing conditions
in Medallia's favor are satisfied on or prior to October 27, 2021; (2) Parent
elects to delay the closing until November 1, 2021; and (3) this termination fee
is paid after November 1, 2021. An investment fund affiliated with Thoma Bravo
has provided Medallia with a limited guaranty in favor of Medallia (the "Limited
Guaranty"). The Limited Guaranty guarantees, among other things, the payment of
the termination fee payable by Parent, subject to the conditions set forth in
the Limited Guaranty.
In addition to the foregoing termination rights, and subject to certain
limitations, each of Medallia or Parent may terminate the Merger Agreement if
the Merger is not consummated by January 22, 2022.
The Merger Agreement also provides that Medallia, on one hand, or Parent and
Merger Sub, on the other hand, may specifically enforce the obligations under
the Merger Agreement, except that Medallia may only cause Parent to consummate
the Merger, and the investment fund affiliated with Thoma Bravo to provide the
equity financing, if certain conditions are satisfied, including the funding or
availability of the debt financing.
Pursuant to an equity commitment letter dated July 25, 2021, an investment fund
affiliated with Thoma Bravo committed to provide Parent, at the effective time
of the Merger, with an equity contribution of up to approximately $5 billion.
Pursuant to a debt commitment letter dated July 25, 2021, the lenders party to
that letter committed to provide Parent, at the effective time of the Merger,
with a debt financing of approximately $1.8 billion.
The foregoing description of the Merger Agreement is qualified in its entirety
by reference to the full text of the Merger Agreement, a copy of which is filed
as Exhibit 2.1 and is incorporated into this report by reference.
The Merger Agreement contains representations and warranties by each of Parent,
Merger Sub and Medallia. These representations and warranties were made solely
for the benefit of the parties to the Merger Agreement and:
• should not be treated as categorical statements of fact, but rather as
a way of allocating the risk to one of the parties if those statements
prove to be inaccurate;
• may have been qualified in the Merger Agreement by disclosures that
were made to the other party in connection with the negotiation of the
Merger Agreement;
--------------------------------------------------------------------------------
• may apply contractual standards of "materiality" that are different
from "materiality" under applicable securities laws; and
• were made only as of the date of the Merger Agreement or such other
date or dates as may be specified in the Merger Agreement.
Voting Agreement
In connection with entering to the Merger Agreement, on July 25, 2021, certain
funds affiliated with Sequoia Capital, as well as Medallia's directors and named
executive officers, in each case in their capacities as stockholders of
Medallia, have entered into voting agreements (the "Voting Agreements") with
Parent and Medallia. These stockholders represent approximately 34 percent of
Medallia's common stock. These Voting Agreements obligate the applicable
stockholders to vote their respective shares of Medallia's common stock in favor
of the adoption of the Merger Agreement and against any competing transaction.
The Voting Agreements terminate in certain circumstances, including in
connection with the Board's determination to (1) change its recommendation with
respect to the Merger; and (2) terminate the Merger Agreement in order to accept
a superior proposal from a third party.
The foregoing description of the Voting Agreements is qualified in its entirety
by reference to the full text of the form of the Voting Agreements, a copy of
which is filed as Exhibit 10.1 and is incorporated into this report by
reference.
Additional Information and Where to Find It
Medallia, its directors and certain executive officers are participants in the
solicitation of proxies from stockholders in connection with the pending
acquisition of Medallia (the "Transaction"). Medallia plans to file a proxy
statement (the "Transaction Proxy Statement") with the Securities and Exchange
Commission (the "SEC") in connection with the solicitation of proxies to approve
the Transaction.
Robert Bernshtyn, Mitchell K. Dauerman, Borge Hald, Leslie J. Kilgore, Douglas
. . .
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
2.1 Agreement and Plan of Merger, dated July 25, 2021, among Project
Metal Parent, LLC, Project Metal Merger Sub, Inc. and Medallia, Inc.*
10.1 Form of Voting Agreement, dated as of July 25, 2021, by and among
Project Metal Parent, LLC, Medallia, Inc. and certain stockholders of
Medallia, Inc.*
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K.
Medallia will furnish supplementally a copy of any omitted schedule or exhibit
to the SEC upon request. Medallia may request confidential treatment pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any
schedules or exhibits so furnished.
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses