Business Context and Reporting Period
Company: Blackbaud, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: January 16, 2012
Event: Entry into a Material Definitive Agreement for the acquisition of Convio, Inc.
Key Financial Metrics and Transaction Terms
- Transaction Value: Approximately $275 million (based on Convio's enterprise value).
- Offer Price: $16.00 per share in cash for all outstanding Convio common stock.
- Termination Fees:
- Convio to pay Blackbaud: $11,000,000 plus up to $1,500,000 in expenses if terminated for a superior proposal.
- Blackbaud to pay Convio: $11,000,000 plus up to $1,500,000 in expenses if terminated due to antitrust issues.
- Support Agreement: Convio directors, officers, and certain stockholders agreed to tender approximately 31.5% of outstanding Convio shares.
Material Changes and Transaction Structure
Blackbaud, through its wholly-owned subsidiary Caribou Acquisition Corporation ("Merger Sub"), entered into an Agreement and Plan of Merger to acquire Convio. The transaction structure involves:
- Tender Offer: Merger Sub will conduct a tender offer to purchase Convio shares at $16.00 per share.
- Merger: Following the tender offer, Merger Sub will merge with and into Convio, with Convio surviving as a wholly-owned subsidiary of Blackbaud.
- Equity Treatment:
- Remaining Convio shares will be converted to cash at the $16.00 per share price.
- Vested Convio options will be terminated and paid in cash (spread between offer price and exercise price).
- Unvested options will be assumed by Blackbaud and converted to Blackbaud stock options.
- Convio warrants will be terminated with cash payment of the spread.
- Top-Up Option: Blackbaud holds an option to purchase additional shares to reach 90.1% ownership if necessary.
Guidance, Outlook, Risks, and Conditions
Closing Timeline: The transaction is expected to close during the first quarter of 2012.
Conditions to Closing:
- Minimum Condition: Valid tender of shares (plus shares owned by Blackbaud/Merger Sub) must constitute a majority of outstanding Convio shares.
- Regulatory: Expiration of waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act and receipt of necessary antitrust consents.
Risks and Contingencies:
- The tender offer has not yet commenced; a Schedule TO will be filed when it begins.
- Convio is restricted from soliciting other takeover proposals unless a superior proposal is received.
- Representations and warranties in the Merger Agreement are qualified by confidential schedules and may change.
Investor Verification Checklist
- Verify the final tender offer documents (Schedule TO) and Convio's solicitation statement (Schedule 14D-9) once filed.
- Confirm the satisfaction of the "Minimum Condition" regarding the percentage of shares tendered.
- Monitor regulatory approvals, specifically antitrust consents under the Hart-Scott-Rodino Act.
- Review the full text of the Merger Agreement (Exhibit 2.4) and Tender and Support Agreement (Exhibit 10.52) for detailed covenants and exceptions.
- Check for any updates on the status of the Top-Up Option exercise conditions.