Etsy, Inc. (NASDAQ:ETSY) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
On July 21, 2019, Etsy, Inc. (“Etsy”), Polanco Acquisition Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Etsy (“Merger Sub”), Reverb Holdings, Inc., a Delaware corporation (“Reverb”), and Fortis Advisors LLC, as the securityholders’ agent, entered into an Agreement and Plan of Merger (the “Merger Agreement”) to which Etsy would acquire all of the outstanding capital stock of Reverb through a merger of Merger Sub with and into Reverb, with Reverb surviving the merger as a wholly owned subsidiary of Etsy (the “Merger”).
to the Merger Agreement, and subject to the terms and conditions contained therein, at the closing of the Merger, Etsy will pay an aggregate consideration of $275 million in cash (the “Merger Consideration”), subject to (i) certain adjustments with respect to Reverb’s debt, cash and net working capital balances at the closing of the Merger, transaction expenses and the value of the Etsy Awards (as defined below) and (ii) the deduction of a portion of the Merger Consideration, which will be deposited into an escrow fund as partial security for the Reverb equityholders’ indemnification obligations under the Merger Agreement. At the effective time of the Merger (the “Effective Time”), each share of capital stock of Reverb will be cancelled and automatically converted into the right to receive a portion of the Merger Consideration in accordance with Reverb’s organizational documents and each vested option to purchase capital stock of Reverb will be cancelled and automatically converted into the right to receive a portion of the Merger Consideration with an aggregate value equal to the intrinsic value of such award. In addition, at the Effective Time, each unvested option to purchase capital stock of Reverb held by a continuing employee or contractor of Reverb will be substituted with awards with respect to common stock of Etsy, after giving appropriate adjustments to reflect the consummation of the Merger (the “Etsy Awards”).
The Merger Agreement contains customary representations, warranties, covenants and agreements of Etsy, Merger Sub and Reverb, including indemnification rights in favor of Etsy that are customary for a transaction of this nature. The closing of the Merger is subject to the satisfaction or waiver of various customary conditions, including, among other things, the expiration or termination of the waiting period under the Hart-Scott-Rodino Act, and is currently expected to occur late in the third quarter or early in the fourth quarter of 2019. The Merger Agreement may be terminated at any time prior to the closing by mutual written consent of Etsy and Reverb, and under certain other conditions, including in the event that the Merger is not consummated on or before October 7, 2019.
The foregoing description of the Merger and the Merger Agreement is not complete and is qualified in its entirety by reference to the full text of the Merger Agreement. A copy of the Merger Agreement is attached as Exhibit 2.01 and incorporated by reference into this Form 8-K.
The Merger Agreement and the description above have been included to provide investors and securityholders with information regarding the terms of the Merger Agreement. They are not intended to provide any other factual information about Etsy, Reverb or their respective subsidiaries, affiliates or stockholders. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of that agreement as of specific dates; were solely for the benefit of the parties to the Merger Agreement; and may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made by each contracting party to the other for the purposes of allocating contractual risk between them that differ from those applicable to investors or securityholders. Investors and securityholders should be aware that the representations, warranties and covenants or any description thereof may not reflect the actual state of facts or condition of Etsy, Reverb, Merger Sub or any of their respective subsidiaries, affiliates, businesses or stockholders. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement. Accordingly, investors and securityholders should read the representations and warranties in the Merger Agreement not in isolation but only in conjunction with the other information about Etsy and its subsidiaries that Etsy includes in reports, statements and other filings it makes with the U.S. Securities and Exchange Commission (the “SEC”).
Item 8.01 Other Events.
On July 22, 2019, Etsy issued a press release announcing its entry into the Merger Agreement, a copy of which is attached as Exhibit 99.1.
