Synchronoss Technologies,Inc. (NASDAQ:SNCR) Files An 8-K Entry into a Material Definitive AgreementItem 1.01. Entry into a Material Definitive Agreement.
On October17, 2017, Synchronoss Technologies,Inc., a Delaware corporation (“Synchronoss” or the “Company”) announced the entry into definitive agreements for the sale of Intralinks Holdings,Inc., a wholly owned subsidiary of Synchronoss (“Intralinks”), and the sale of a newly created series of preferred stock of Synchronoss to affiliates of Siris Capital Group, LLC (“Siris”).
As of October16, 2017, investment funds affiliated with Siris owned 5,994,667 shares of Synchronoss’ common stock, par value $0.0001 per share (the “Common Stock”), or approximately 12.6% of the issued and outstanding Common Stock as of such date (the “Existing Siris Shares”).
Subject to the terms and conditions set forth in the Share Purchase Agreement, dated as of October17, 2017 (the “Share Purchase Agreement”), among Synchronoss, Intralinks and Impala Private Holdings II, LLC, an affiliate of Siris (“Impala”),Impala will acquire from Synchronoss the issued and outstanding shares of common stock of Intralinks for approximately $977 million in cash plus a potential contingent payment of up to $25 million (as more fully described below), subject to an adjustment for cash, debt and working capital (the “Intralinks Transaction”).
In addition, subject to the terms and conditions set forth in the Securities Purchase Agreement, dated as of October17, 2017 (the “PIPE Purchase Agreement”), between Synchronoss and Silver Private Holdings I, LLC, an affiliate of Siris (“Silver”), Synchronoss will issue and sell to Silver 185,000 shares of preferred stock of Synchronoss, par value $0.0001 per share, with an initial liquidation preference of $1,000 per share, which will be designated as SeriesA Convertible Participating Perpetual Preferred Stock (the “SeriesA Preferred Stock”), for an aggregate purchase price of $185 million, consisting of (i)$97.7 million in cash and (ii)the transfer from Silver to Synchronoss of the Existing Siris Shares, valued for this purpose at approximately $87.3 million in the aggregate (the“Preferred Transaction”). Prior to or contemporaneously with the consummation of the Preferred Transaction, Synchronoss will (i)file a Certificate of Designation with the State of Delaware setting forth the rights, preferences, privileges, qualifications, restrictions and limitations on the SeriesA Preferred Stock (the “SeriesA Certificate”) and (ii)enter into an Investor Rights Agreement with Silver setting forth certain registration, governance and preemptive rights of Silver with respect to Synchronoss.
Sale of Intralinks
Share Purchase Agreement
Subject to the terms and conditions of the Share Purchase Agreement, at the closing of the Intralinks Transaction,Impala will acquire the issued and outstanding shares of Intralinks for approximately $977 million in cash, subject to adjustments for changes in cash, debt and working capital. If, in the future, Impala receives net cash proceeds in excess of $440 million from any sale of equity or assets of Intralinks, or from a dividend or distribution in respect of the shares of Intralinks,then Impala shall be required to pay Synchronoss up to an additional $25 million in cash or, in some cases, publicly-traded securities. The closing of the Intralinks Transaction is subject to certain closing conditions, including (i)the receipt of certain antitrust and foreign competition approvals, (ii)the absence of any law or court or governmental order or injunction preventing, prohibiting or making illegal the consummation of the Intralinks Transaction, (iii)the entry into and delivery of a transition services agreement between Synchronoss and Impala, (iv)the receipt by Synchronoss (and delivery to Impala) of solvency and fairness opinions, (v)the absence of any Material Adverse Effect (as defined in the Share Purchase Agreement) with respect to Intralinks and (vi)Impala being satisfied in its reasonable discretion that no regulatory or other governmental development (other than under antitrust laws) affecting Intralinks or its subsidiaries, or any of its officers, employees or directors would reasonably be likely to cause an adverse effect on Intralinks,Impala or their respective affiliates (or adversely affect the benefits of the Intralinks Transaction to Impala or its affiliates) following consummation of the Intralinks Transaction. The closing of the Intralinks Transaction is not subject to any financing contingency. Immediately following the consummation of the Intralinks Transaction, Synchronoss will pay to Impala $5 million as partial reimbursement of the out-of-pocket fees and expenses incurred by Impala, Siris and their respective affiliates in connection with the execution of the Share Purchase Agreement and the Intralinks Transaction.
The Share Purchase Agreement contains customary representations and warranties and covenants made by each of Impala,Intralinks and Synchronoss, which include covenants regarding: (i)the conduct of the operations of Intralinks prior to the consummation of the Intralinks Transaction, (ii)customary “no-shop” restrictions on Synchronoss’ ability to solicit alternative acquisition proposals for Intralinks and (iii)the use of reasonable best efforts to cause the Intralinks Transaction to be consummated.
Siris has obtained debt financing commitments from Royal Bank of Canada, Golub Capital LLC, and Macquarie Capital Funding LLC for the purpose of financing the transactions contemplated by the Share Purchase Agreement and paying related fees and expenses. The obligations of the lenders to provide debt financing under the debt commitment letter are subject to certain conditions.