SuccessFactors (SFSF) May Pay $112.5M, Under Certain Circumstances, in Termination of SAP (SAP) Merger
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The following items were disclosed Monday following the announcement that SuccessFactors, Inc. (Nasdaq: SFSF), and SAP America, Inc. (NYSE: SAP), entered a merger agreement over the weekend:
Purchaser has agreed to commence the Offer within 10 business days of December 3, 2011. The consummation of the Offer will be conditioned on (i) at least a majority of the shares of the Company’s common stock (calculated on a fully diluted basis in accordance with the Merger Agreement) having been validly tendered into and not withdrawn from the Offer, (ii) receipt of certain regulatory approvals, including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, approval by the Committee on Foreign Investment in the United States under the Exon-Florio Act, and approval under certain foreign antitrust laws, (iii) the accuracy of the representations and warranties and compliance with the covenants contained in the Merger Agreement, subject to qualifications, and (iv) other customary conditions.
The Merger Agreement provides that, following the consummation of the Offer, Purchaser will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of Parent. In the Merger, each outstanding share of the Company’s common stock (other than treasury shares, shares held by Parent, Purchaser or any of their wholly-owned subsidiaries, or as to which dissenters’ rights have been properly exercised) will be converted into the right to receive the Offer Price. The consummation of the Merger is subject to certain closing conditions, including approval by the Company’s stockholders, if required, as described below.
In addition, in connection with the transactions contemplated by the Merger Agreement, all options (whether vested or unvested) of the Company which are unexpired, unexercised and outstanding at the time the Merger is consummated will be cancelled and converted into the right to receive, within 30 days following the consummation of the Offer, an amount in cash equal to the product of (x) the aggregate number of shares of common stock of the Company subject to such options and (y) the excess, if any, of the Offer Price over the per share exercise price of each option. All unvested shares of the Company’s common stock subject to forfeiture or a right of repurchase by the Company at the time the Merger is consummated (“Restricted Stock”) and all of the Company’s restricted stock units (“Equity Plan Stock”) that are unvested as the time the Merger is consummated, in each case, other than those held by non-employee directors, will remain subject to the vesting terms that applied with respect to such shares of Restricted Stock or Equity Plan Stock immediately prior to the consummation of the Offer under the Restricted Stock or Equity Plan Stock award applicable to such shares of Restricted Stock or Equity Plan Stock. Each holder of unvested shares of Restricted Stock or Equity Plan Stock will be paid in a cash lump-sum on the date upon
which such shares of Restricted Stock or Equity Plan Stock would have vested under the terms and conditions set forth in the Restricted Stock or Equity Plan Stock award applicable to such shares of Restricted Stock or Equity Plan Stock. All shares of Restricted Stock or Equity Plan Stock which are vested at the time the Merger is consummated, in each case, other than those held by non-employee directors, following the consummation of the Merger will be cancelled and converted into the right to receive an amount in cash equal to the Offer Price. All shares of Restricted Stock and Equity Plan Stock held by non-employee directors will be cancelled and converted into the right to receive within 30 days following the consummation of the Merger an amount in cash equal to the Offer Price.
The Company has granted to Purchaser an irrevocable option (the “Top-Up Option”) under the Merger Agreement to purchase at a per share price equal to the Offer Price, following the consummation of the Offer and subject to certain conditions and limitations, newly issued shares of the Company’s common stock, up to the total number of its authorized but unissued shares, less the number of shares of the Company’s common stock reserved for issuance, equal to the number of shares that, when added to the number of shares of the Company’s common stock owned by Parent, Purchaser and their wholly-owned subsidiaries immediately following the consummation of the Offer, shall equal one share more than 90% of the shares of the Company’s common stock outstanding after giving effect to the shares issuable under the Top-Up Option (calculated on a fully diluted basis in accordance with the Merger Agreement). The Top-Up Option is intended to expedite the timing of the completion of the Merger by effecting the Merger pursuant to Delaware’s “short form” merger statute. Following the Offer and, if necessary, the exercise of the Top-Up Option, if Purchaser does not own at least 90% of the outstanding Shares, a Company stockholder vote will be required to consummate the Merger. In such case, the approval of the Merger at a meeting of the Company’s stockholders would be assured because of Purchaser’s ownership of at least a majority of the shares of the Company’s common stock (calculated on a fully diluted basis in accordance with the Merger Agreement) following completion of the Offer.
The Merger Agreement contains customary representations, warranties and covenants of the parties. The Company has agreed to operate its business in the ordinary course, and has also agreed to refrain from engaging in certain activities. In addition, under the terms of the Merger Agreement, the Company has agreed not to solicit or support any alternative acquisition proposals, subject to customary exceptions for the Company to respond to and support unsolicited proposals in the exercise of the fiduciary duties of the Board of Directors of the Company. The Company will be obligated to pay a termination fee of $112.5 million to Parent in certain customary circumstances.
Purchaser has agreed to commence the Offer within 10 business days of December 3, 2011. The consummation of the Offer will be conditioned on (i) at least a majority of the shares of the Company’s common stock (calculated on a fully diluted basis in accordance with the Merger Agreement) having been validly tendered into and not withdrawn from the Offer, (ii) receipt of certain regulatory approvals, including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, approval by the Committee on Foreign Investment in the United States under the Exon-Florio Act, and approval under certain foreign antitrust laws, (iii) the accuracy of the representations and warranties and compliance with the covenants contained in the Merger Agreement, subject to qualifications, and (iv) other customary conditions.
The Merger Agreement provides that, following the consummation of the Offer, Purchaser will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of Parent. In the Merger, each outstanding share of the Company’s common stock (other than treasury shares, shares held by Parent, Purchaser or any of their wholly-owned subsidiaries, or as to which dissenters’ rights have been properly exercised) will be converted into the right to receive the Offer Price. The consummation of the Merger is subject to certain closing conditions, including approval by the Company’s stockholders, if required, as described below.
In addition, in connection with the transactions contemplated by the Merger Agreement, all options (whether vested or unvested) of the Company which are unexpired, unexercised and outstanding at the time the Merger is consummated will be cancelled and converted into the right to receive, within 30 days following the consummation of the Offer, an amount in cash equal to the product of (x) the aggregate number of shares of common stock of the Company subject to such options and (y) the excess, if any, of the Offer Price over the per share exercise price of each option. All unvested shares of the Company’s common stock subject to forfeiture or a right of repurchase by the Company at the time the Merger is consummated (“Restricted Stock”) and all of the Company’s restricted stock units (“Equity Plan Stock”) that are unvested as the time the Merger is consummated, in each case, other than those held by non-employee directors, will remain subject to the vesting terms that applied with respect to such shares of Restricted Stock or Equity Plan Stock immediately prior to the consummation of the Offer under the Restricted Stock or Equity Plan Stock award applicable to such shares of Restricted Stock or Equity Plan Stock. Each holder of unvested shares of Restricted Stock or Equity Plan Stock will be paid in a cash lump-sum on the date upon
which such shares of Restricted Stock or Equity Plan Stock would have vested under the terms and conditions set forth in the Restricted Stock or Equity Plan Stock award applicable to such shares of Restricted Stock or Equity Plan Stock. All shares of Restricted Stock or Equity Plan Stock which are vested at the time the Merger is consummated, in each case, other than those held by non-employee directors, following the consummation of the Merger will be cancelled and converted into the right to receive an amount in cash equal to the Offer Price. All shares of Restricted Stock and Equity Plan Stock held by non-employee directors will be cancelled and converted into the right to receive within 30 days following the consummation of the Merger an amount in cash equal to the Offer Price.
The Company has granted to Purchaser an irrevocable option (the “Top-Up Option”) under the Merger Agreement to purchase at a per share price equal to the Offer Price, following the consummation of the Offer and subject to certain conditions and limitations, newly issued shares of the Company’s common stock, up to the total number of its authorized but unissued shares, less the number of shares of the Company’s common stock reserved for issuance, equal to the number of shares that, when added to the number of shares of the Company’s common stock owned by Parent, Purchaser and their wholly-owned subsidiaries immediately following the consummation of the Offer, shall equal one share more than 90% of the shares of the Company’s common stock outstanding after giving effect to the shares issuable under the Top-Up Option (calculated on a fully diluted basis in accordance with the Merger Agreement). The Top-Up Option is intended to expedite the timing of the completion of the Merger by effecting the Merger pursuant to Delaware’s “short form” merger statute. Following the Offer and, if necessary, the exercise of the Top-Up Option, if Purchaser does not own at least 90% of the outstanding Shares, a Company stockholder vote will be required to consummate the Merger. In such case, the approval of the Merger at a meeting of the Company’s stockholders would be assured because of Purchaser’s ownership of at least a majority of the shares of the Company’s common stock (calculated on a fully diluted basis in accordance with the Merger Agreement) following completion of the Offer.
The Merger Agreement contains customary representations, warranties and covenants of the parties. The Company has agreed to operate its business in the ordinary course, and has also agreed to refrain from engaging in certain activities. In addition, under the terms of the Merger Agreement, the Company has agreed not to solicit or support any alternative acquisition proposals, subject to customary exceptions for the Company to respond to and support unsolicited proposals in the exercise of the fiduciary duties of the Board of Directors of the Company. The Company will be obligated to pay a termination fee of $112.5 million to Parent in certain customary circumstances.
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