Concurrently with the execution of the Merger Agreement, Parent has obtained equity and debt financing commitments for the transactions contemplated by the Merger Agreement. Sixth Street Partners and the other lenders party thereto are parties to a debt commitment letter delivered to Parent and has agreed to provide debt financing for the transactions in the aggregate principal amount of up to $385 million, subject to the terms and conditions set forth in such commitment letter. In addition, funds affiliated with GTCR, a fund affiliated with Sycamore Partners, and United Parcel Service of America, Inc. (together, the “Investors”) have each delivered an equity commitment letter (each, an “Equity Commitment Letter”) to Parent, pursuant to which, upon the terms and subject to the conditions set forth in the Equity Commitment Letters, such Investors have committed to capitalize Parent with an aggregate equity contribution of $325 million at the closing of the Merger. The Merger is not subject to a financing condition. In addition, concurrently with the execution of the Merger Agreement, the Investors and certain other equityholders of CommerceHub have entered into a limited guarantee, pursuant to which such parties have agreed to guarantee Parent’s obligation to pay any termination fee, reimburse and indemnify the Company with respect to certain expenses in connection with Parent’s debt financing and pay certain other amounts required under the Merger Agreement, subject to the terms thereof.
Consummation of the Merger is subject to certain conditions, including, but not limited to, the: (i) Company’s receipt of the approval of the Company’s stockholders representing a majority of the outstanding Shares (the “Company Required Vote”); (ii) expiration or termination of any waiting periods applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976; and (iii) absence of any legal requirement, order or injunction enjoining or otherwise prohibiting the consummation of the Merger.
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 Merger Agreement also includes covenants requiring the Company not to (i) solicit, initiate, or knowingly facilitate, or knowingly encourage (including by way of furnishing non-public information) any acquisition proposal or any inquiries regarding, or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, an acquisition proposal, or (ii) engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish or afford access to any other person any non-public information relating to the Company, among other prohibitions and subject to a customary “fiduciary out” provision that allows the Company, under certain specified circumstances, to provide information to, and participate in discussions and engage in negotiations with, third parties with respect to an acquisition proposal if the Company’s board of directors (the “Company Board”) determines in good faith (after consultation with its financial advisors and outside legal counsel) that such acquisition proposal either (x) constitutes a superior offer or (y) could reasonably be expected to lead to a superior offer, and the failure to explore such alternative acquisition proposal could reasonably be expected to lead to a breach of its fiduciary duties under applicable legal requirements. The Company has also agreed to convene a meeting of its stockholders for the purpose of obtaining the Company Required Vote.
The Merger Agreement contains certain termination rights for the Company and Parent. Upon termination of the Merger Agreement in accordance with its terms, under specified circumstances, the Company will be required to pay Parent a termination fee, including if the Merger Agreement is terminated due to (i) the Company accepting a superior offer, (ii) the Company breaching its non-solicitation obligations subject to customary cure rights, or (iii) the Company Board’s withdrawal of its recommendation of the Merger, then the termination fee payable by the Company to Parent will be $23,000,000. The Merger Agreement further provides that Parent will be required to pay the Company a termination fee of $62,000,000 in the event that the Merger Agreement is terminated under certain specified circumstances, including if the Merger Agreement is terminated by the Company following: (i) Parent’s failure to consummate the Merger as required pursuant to, and in the circumstances specified in, the Merger Agreement; or (ii) Parent or Merger Sub’s material breach of its representations, warranties or covenants in a manner that would cause the related closing conditions to not be satisfied. In addition, the Merger Agreement provides that Parent will be required to pay the Company a termination fee of $47,000,000 in the event that the Merger Agreement is terminated (i) by the Company or Parent due to a legal restraint prohibiting the Merger and such legal restraint relates to, arises under, or is in connection with U.S. antitrust law or (ii) by Parent or the Company on or after March 6, 2023 (the “Termination Date”) and certain U.S. antitrust closing conditions have not been satisfied.
In addition to the foregoing termination rights, and subject to certain limitations, the Company or Parent may terminate the Merger Agreement if the Merger is not consummated by the Termination Date, subject to either party’s ability to extend for an additional 3 months if the Transactions have not been consummated if certain antitrust closing conditions have not been satisfied.
The foregoing description of the Merger Agreement and the transactions contemplated thereby does not purport to be complete, and is subject to, and qualified in its entirety by reference to, the full text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
The Merger Agreement contains representations and warranties by each of Parent, Merger Sub and the Company. These representations and warranties were made solely for the benefit of the parties to the Merger Agreement and: (i) should not be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) may have been qualified in the Merger Agreement by disclosures that were made to the other party in connection with the negotiation of the Merger Agreement; and (iii) may apply contractual standards of “materiality” that are different from “materiality” under applicable securities laws.