Item 1.01.
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Entry into a Material Definitive Agreement.
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Merger Agreement
On June 10,
2019, Shutterfly, Inc., a Delaware corporation (
Company
), Photo Holdings, LLC, a Delaware limited liability company (
Parent
), and Photo Holdings Merger Sub, Inc., a Delaware corporation and a
wholly owned subsidiary of Parent (
Merger Sub
), entered into an Agreement and Plan of Merger (
Merger Agreement
). The Board of Directors of the Company (the
Board
) has
unanimously determined that the terms of the Merger Agreement and the transactions contemplated thereby, including the Merger (as defined below), are fair to and in the best interests of the Company and its stockholders and approved the Merger
Agreement and the transactions contemplated thereby, and unanimously resolved to recommend that the Companys stockholders vote to approve the Merger Agreement.
Parent and Merger Sub are affiliates of certain funds (the
Apollo Funds
) managed by affiliates of Apollo Global
Management, LLC (together with its consolidated subsidiaries,
Apollo
). Parent and Merger Sub have secured committed financing, consisting of a combination of equity to be provided by the Apollo Funds (which, in accordance
with the terms of the equity funding letter, dated June 10, 2019, will be provided if certain conditions are satisfied, including the funding or availability of the debt financing) and committed debt financing, the aggregate proceeds of which
will be sufficient for Parent and Merger Sub to pay the aggregate merger consideration and all related fees and expenses. Parent 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 June 10, 2019. The transaction is not subject to a financing condition.
Pursuant to the terms of the Merger Agreement, and subject to the conditions specified in the Merger Agreement, Merger Sub will merge with and
into the Company, with the Company surviving as a wholly owned subsidiary of Parent (the
Merger
). If the Merger is completed, the Company shareholders will be entitled to receive $51.00 in cash (the
Merger
Consideration
) for each share of the Companys common stock par value $0.0001 (the
Company Common Stock
) owned by them as of immediately prior to the effective time of the Merger (the
Effective Time
).
In addition, at the Effective Time, each option to purchase Company Common Stock (a
Company Option
), each restricted stock unit of the Company (a
Company RSU
), each performance-based restricted stock unit of the Company (a
Company PSU
) and each
market-based restricted stock unit of the Company (a
Company MSU
) that is outstanding as of the Effective Time, will be converted into the right to receive an amount in cash equal to the product of (A) the aggregate
number of shares of Company Common Stock subject to such award multiplied by the Per Share Merger Consideration (minus, in the case of Company Options, the applicable per share exercise price) subject to any required withholding of Taxes. These
amounts will be paid by the Company to the applicable holders following the Closing, on the earlier of (x) specified payment dates and (y) the date on which the holder of such Company Option suffers a Qualifying Termination (as
defined in the Merger Agreement), subject to the terms and conditions of the Merger Agreement, without limitation to
pre-existing
acceleration rights that any holder may have. Each Company PSU and Company MSU
for which the performance measurement period has not been completed and the level of performance achievement has not previously been determined will first be subject to the treatment set forth in the applicable award agreement (or in any other
agreement then in effect between the holder of the Company PSU or Company MSU and the Company) with respect to determination of the level of performance achievement or, in the absence of any provisions setting forth such treatment, will be deemed to
have a level of performance achievement equal to 100% of the target level of performance achievement set forth in the applicable award agreement. These amounts will be paid by the Company to the applicable holders following the Closing, on the
earlier of (x) specified payment dates and (y) the date on which the holder of such Company PSU or Company MSU suffers a Qualifying Termination (as defined in the Merger Agreement), subject to the terms and conditions of the
Merger Agreement, without limitation to
pre-existing
acceleration rights that any holder may have.
The consummation of the Merger is subject to certain conditions, including (i) approval of the Merger Agreement by holders of not less
than a majority of the outstanding shares of Company Common Stock; (ii) the absence of any temporary restraining order, preliminary or permanent injunction, or any law or other judgment