Item 1.01. Entry into a Material Definitive Agreement.
On November 26, 2017, Barracuda Networks, Inc. (the
Company
) entered into an Agreement and Plan of Merger (the
Merger Agreement
) with Project Deep Blue Holdings, LLC (
Newco
) and Project Deep Blue Merger Corp., a wholly owned subsidiary of Newco (
Merger Sub
), providing for the merger of Merger Sub with
and into the Company (the
Merger
), with the Company surviving the Merger as a wholly owned subsidiary of Newco. Newco and Merger Sub were formed by an affiliate of private equity investment firm Thoma Bravo, LLC (
Thoma
Bravo
). Capitalized terms not otherwise defined have the meaning set forth in the Merger Agreement.
At the Effective Time of
the Merger, each share of common stock, par value $0.001 per share, of the Company (the
Company Common Stock
) issued and outstanding as of immediately prior to the Effective Time (other than Owned Shares or Dissenting Shares) will
be cancelled and extinguished and automatically converted into the right to receive cash in an amount equal to $27.55, without interest thereon (the
Per Share Price
). Vested Company Options will be cancelled and converted into the
right to receive the Per Share Price, less the exercise price per share. Unvested Company Options and unvested RSUs will be cancelled an converted into the contingent right to receive the Per Share Price following satisfaction of the underlying
vesting conditions of such unvested Company Options and unvested RSUs.
Newco and Merger Sub have secured committed financing, consisting
of a combination of equity to be provided by investment funds affiliated with Thoma Bravo and debt financing from Goldman Sachs & Co. LLC, Credit Suisse and UBS Investment Bank, the aggregate proceeds of which will be sufficient for Newco
and Merger Sub to pay the aggregate merger consideration and all related fees and expenses. Newco and Merger Sub have committed to use their reasonable best efforts to obtain the debt financing on the terms and conditions described in the debt
commitment letter entered into as of November 26, 2017. The transaction is not subject to a financing condition.
Consummation of the
Merger is subject to customary closing conditions, including, without limitation, the absence of certain legal impediments, the expiration or termination of the required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, antitrust regulatory approval in Germany and Austria and approval by the Companys stockholders.
The Company has made
customary representations and warranties in the Merger Agreement and has agreed to customary covenants regarding the operation of the business of the Company and its Subsidiaries prior to the Effective Time. The Company is also subject to customary
restrictions on its ability to solicit alternative acquisition proposals from third parties and to provide non-public information to, and participate in discussions and engage in negotiations with, third parties regarding alternative acquisition
proposals, with customary exceptions for Superior Proposals.
The Merger Agreement contains certain termination rights for the Company and
Newco. Upon termination of the Merger Agreement under specified circumstances, the Company will be required to pay Newco a termination fee of $48,260,000. If the Merger Agreement is terminated in connection with the Company accepting a Superior
Proposal or due to the Company Boards change or withdrawal of its recommendation of the Merger, then the termination fee will become payable by the Company to Newco. This termination fee will also be payable if the Merger Agreement is
terminated because the Companys stockholders did not vote to adopt the Merger Agreement and prior to such termination, a proposal to acquire at least 50% of the Companys stock or assets is publicly announced and the Company enters into
an agreement for, or completes, a transaction contemplated by such proposal within one year of termination. In addition, the Company will be required to reimburse Newco for up to $3,000,000 of its expenses associated with the transaction if the
Merger Agreement is terminated because the Companys stockholders do not vote to adopt the Merger Agreement or if the Company breaches its representations, warranties or covenants in a manner that would cause the related closing conditions to
not be met.
Upon termination of the Merger Agreement under other specified circumstances, Newco will be required to pay the Company a
termination fee of $96,530,000. The termination fee by Newco will become payable if Newco fails to consummate the Merger after certain conditions are met, if Newco breaches its representations, warranties or covenants in a manner that would cause
the related closing conditions to not be met, or if either party terminates because of the termination date described below, and at the time of such termination, the Company was otherwise