Item 1.01.
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Entry into a Material Definitive Agreement.
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On November 24, 2019, eBay Inc., a Delaware corporation (“eBay”), and eBay International AG, a subsidiary of eBay (together with eBay, the “Sellers”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) with PUG LLC, a Delaware limited liability company (“Purchaser”), and, solely for the purposes set forth therein, Pugnacious Endeavors, Inc., a Delaware corporation (“Purchaser Guarantor”), pursuant to which Purchaser will acquire the StubHub business (the “Business”) of eBay by means of a sale of all of the outstanding equity interests of certain subsidiaries held by the Sellers which operate the Business.
Pursuant to the Purchase Agreement, Purchaser will pay a purchase price of $4.05 billion in cash, subject to certain adjustments specified therein, including for indebtedness, cash, working capital and transaction expenses of the Business at the closing of the transaction (the “Transaction”). Purchaser Guarantor has agreed to guarantee the obligations of Purchaser under the Purchase Agreement.
Each party’s obligation to consummate the Transaction pursuant to the Purchase Agreement is subject to customary closing conditions as set out therein, including, among others, (i) subject to certain exceptions, the accuracy of the representations and warranties of the parties; (ii) performance in all material respects by each of the parties of its covenants and agreements; (iii) the receipt of required regulatory clearance; and (iv) the absence of any law or order from any governmental entity prohibiting consummation of the Transaction.
Pursuant to the Purchase Agreement, eBay and Purchaser will enter into certain ancillary agreements at the closing of the Transaction, including agreements relating to intellectual property matters and transition services.
The Purchase Agreement contains customary representations, warranties and covenants by each party that are subject, in some cases, to specified exceptions and qualifications contained in the Purchase Agreement.
The Purchase Agreement also includes certain termination rights, including (i) by either eBay or Purchaser, if the Transaction is not consummated on or before November 24, 2020 (the “Outside Date”), (ii) by either eBay or Purchaser, if any law or order from a governmental entity permanently prohibits consummation of the Transaction, (iii) by either eBay or Purchaser, if the other party is in material breach of its respective representations and warranties or covenants under the Agreement such that a closing condition is not satisfied (subject to a cure period), or (iv) by eBay, if Purchaser fails to consummate the Transaction after all closing conditions have been satisfied.
The Purchase Agreement provides that, in connection with the termination of the Agreement by eBay under certain specified circumstances, including as a result of the parties’ failure to obtain required regulatory approvals or Purchaser’s failure to consummate the Transaction after all closing conditions have been satisfied, eBay will be entitled to receive a termination fee of $200 million. Certain investment funds affiliated with Madrone Capital Partners, Bessemer Venture Partners, Declaration Partners and WestCap Group have provided a limited guaranty to eBay guaranteeing the payment of the termination fee and certain other obligations of Purchaser under the Purchase Agreement.
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement, which is attached hereto as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference. The Purchase Agreement has been included to provide eBay’s stockholders with information regarding its terms. It is not intended to provide any other information about eBay or Purchaser or their respective subsidiaries and affiliates. The Purchase Agreement contains representations and warranties by each of the Sellers, Purchaser and Purchaser Guarantor. These representations and warranties were made solely for the benefit of the other parties to the Purchase Agreement and (i) may have been used for purposes of allocating risk between the respective parties rather than establishing matters as facts, (ii) may have been qualified in the Purchase Agreement by confidential disclosure schedules that were delivered to the other parties in connection with the signing of the Purchase Agreement, which disclosure schedules may contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth in the Purchase Agreement, (iii) may be subject to a contractual standard of materiality applicable to the parties that differs from what a stockholder may view as material and (iv) may