Business Context and Reporting Period
This Form 8-K Current Report was filed by Clarivate Plc on May 17, 2021, regarding events occurring on May 15, 2021. The filing primarily announces the entry into a material definitive agreement to acquire ProQuest, a global software, data, and analytics provider for academic and research institutions.
Key Financial Metrics and Transaction Details
- Transaction Value: Approximately $4.0 billion in total consideration.
- Consideration Structure:
- Cash component: Approximately $4.0 billion (includes refinancing of ~$1.0 billion of ProQuest debt).
- Equity component: 46,910,922 Clarivate ordinary shares (representing ~7% pro forma fully diluted ownership).
- Financing: Clarivate secured a $4.0 billion unsecured bridge facility to fund the cash portion, with plans to raise long-term capital prior to closing.
- Financial Outlook: The company reaffirmed its 2021 outlook for adjusted revenues, adjusted EBITDA, adjusted EBITDA margin, adjusted diluted EPS, and adjusted free cash flow, explicitly excluding the ProQuest transaction.
Material Changes and Corporate Actions
The filing details two primary corporate actions:
- ProQuest Acquisition: Clarivate agreed to acquire ProQuest from Cambridge Information Group (CIG), Atairos, and other equityholders. Closing is expected in the third quarter of 2021, subject to customary conditions including Hart-Scott-Rodino antitrust clearance.
- Board Appointments: Upon closing, Andrew M. Snyder (CIG) and Michael J. Angelakis (Atairos) will join the Clarivate board, with Mr. Snyder serving as Vice Chairman.
- Capri Restructuring: Clarivate entered an agreement to restructure shares held by Capri Acquisition Topco Limited (controlled by Leonard Green & Partners). This involves a share exchange and subsequent cancellation of shares, resulting in no change to beneficial ownership.
Guidance, Risks, and Contingencies
- Lock-Up Agreements: The Seller Group agreed not to dispose of Clarivate shares for one year post-closing. CIG agreed to extend this restriction to half of its shares for two years.
- Risk Factors: The filing references risks related to the ability to close the transaction, obtain permanent financing, and realize expected synergies. Actual results may differ materially from forward-looking statements due to economic conditions and other uncertainties.
- Regulatory Approval: The transaction is contingent on regulatory clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Investor Verification Checklist
- Verify the status of Hart-Scott-Rodino antitrust clearance for the ProQuest acquisition.
- Confirm the terms and closing of the long-term capital raise intended to replace the $4.0 billion bridge facility.
- Review the specific synergies and integration plans detailed in the investor presentation (Exhibit 99.2).
- Monitor the timeline for the third-quarter 2021 closing date.
- Assess the impact of the 7% equity dilution on existing shareholders.