On July 30, 2020, at the request of the Board, Truist Securities
began distributing the anonymous teaser and form of non-disclosure
agreement. Over the course of the next two weeks, Truist
Securities, at the Board’s direction and on the Company’s behalf,
contacted a total of 134 potential buyers, consisting of 15
potential strategic buyers and 119 potential financial sponsors. 49
buyers declined to execute the non-disclosure agreement. Many of
these buyers cited a lack of strategic fit or concerns related to a
transaction with a public company and the complexities associated
with such a transaction. Upon receipt of an executed non-disclosure
agreement from each of the remaining parties, Truist Securities
delivered a CIM to the interested party and granted access to the
online data room. Overall, Truist Securities delivered a CIM to 85
interested parties, including three potential strategic buyers and
82 financial sponsors. Over the next several weeks, representatives
of the Company continued to populate the data room with additional
financial and other information regarding the Company. During this
same time period, representatives of Troutman began to prepare a
form of bid merger agreement.
On or about August 18, 2020, Truist Securities, at the request of
the Board, delivered a formal process letter to interested parties
requesting initial indications of interest to be received by
September 2, 2020. On or before September 4, 2020, the Company
received indications of interest from 11 parties including Ardian,
all financial sponsors. The preliminary indications of interest
received by the Company presented valuations for the Company in
different manners, some of which were based upon enterprise value
of the Company and some of which were presented on a per share
price basis. Truist Securities reviewed and analyzed the
indications of interest and, using the same assumptions and
methodologies across all indications of interest, translated the
preliminary proposals to an estimated per share price offered by
each financial sponsor, which preliminarily ranged from
approximately $6.00 to $9.00 per share. From August 18, 2020 to
September 4, 2020, the closing price of PRGX common stock on Nasdaq
ranged from $5.11 to $5.68.
During the weeks of September 14 and September 21, 2020, 10 of the
11 parties submitting indications of interest attended virtual
meetings with representatives of the Company’s executive management
team.
On September 22, 2020, the Board met and discussed the indications
of interest and next steps. Representatives of Truist Securities
and Troutman attended the meeting. Representatives of Truist
Securities reviewed the indications of interest and provided
background on the financial sponsors that had submitted indications
of interest and attended virtual management meetings.
Representatives of Truist Securities and Troutman answered
questions regarding next steps and the anticipated timeline. Later
that day, at the request of the Board, Truist Securities
distributed another process letter to the remaining interested
parties requesting refreshed indications of interest to be
submitted by October 5, 2020.
On or before October 6, 2020, the Company received refreshed
indications of interest from five parties, including Ardian. Truist
Securities, applying the same methodologies and assumptions to
these five refreshed indications of interest, translated the five
refreshed proposals to an estimated per share price ranging from
approximately $5.30 to $9.00 per share. The remaining parties did
not submit refreshed indications of interest for reasons including
a lack of strategic fit, competing priorities for other
opportunities and considerations regarding whether their bids
remained competitive in the process. From September 22, 2020 to
October 6, 2020, the closing price of PRGX common stock on Nasdaq
ranged from $4.75 to $5.00.
On October 7, 2020, Truist Securities, at the Board’s direction,
distributed the form of merger agreement to the remaining
interested parties.
During the week of October 12, 2020, three of the remaining parties
held in person meetings with members of the Company’s executive
management team, which enabled them to determine whether to submit
a final proposal and to refine further the amounts of their
proposals. Sponsor B met with the management team in Atlanta on
October 13, 2020. Sponsor C met with the management team outside of
Washington, DC on October 15, 2020. Representatives of Ardian met
with representatives of the PRGX management team outside of
Washington, DC on October 14 and 15, 2020.
On October 15, 2020, Truist Securities, at the request of the
Board, distributed another process letter requesting final
indications of interest by October 23, 2020, along with a mark-up
of the proposed merger agreement.
On or before October 24, 2020, the Company received final
indications of interest from Sponsor B and Ardian, as well as a
mark-up of the proposed form of merger agreement from each. From
October 15, 2020 to October 24, 2020, the closing price of PRGX
common stock on Nasdaq ranged from $4.73 to $5.25. The indication
of interest from Sponsor B proposed a purchase price of $7.00 per
fully diluted share. During discussions between Truist Securities
and Sponsor B regarding Sponsor B’s final indication of interest,
Sponsor B indicated that it might be able to increase its price
slightly above $7.00 per share, but it was apparent that Sponsor
B’s price would not be comparable to the price offered by Ardian in
its final indication of interest.
The indication of interest from Ardian, informed by the management
meetings, further due diligence conducted during October 2020 and
the available levels of debt financing, proposed an enterprise
value of $215 million on a debt-free and cash-free basis, after
giving effect to the Company’s transaction expenses, which Truist
Securities roughly estimated would translate into a price per
share
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