Business Context and Reporting Period
This Form 8-K Current Report is filed by Clarivate Plc on July 29, 2021, regarding events occurring on July 28, 2021. The filing primarily addresses the extension of the outside date for the pending acquisition of ProQuest and provides updates on financing instruments tied to the transaction. The report also references the Company's earnings announcement for the second quarter ended June 30, 2021, though specific financial results are contained in a separate press release (Exhibit 99.1) and are not detailed within the text of this filing.
Key Financial Metrics and Capital Structure
The filing details significant capital raising activities undertaken to finance the ProQuest acquisition, which has a total consideration of approximately $4.0 billion (including $1.0 billion of refinanced ProQuest debt and 46.9 million Clarivate ordinary shares).
- Equity Offerings (Closed June 14, 2021): Net proceeds of approximately $724 million from ordinary shares and $1.39 billion from 5.25% Series A Mandatory Convertible Preferred Shares.
- Debt Offerings (Closed June 24, 2021): $1.0 billion of 3.875% senior secured notes due 2028 and $1.0 billion of 4.875% senior notes due 2029. Proceeds are held in escrow pending acquisition completion.
- Liquidity Support: A $2.0 billion unsecured bridge facility has been obtained to provide certainty of funds if the Notes must be redeemed prior to acquisition completion.
Specific revenue, profit, cash flow, and margin figures for the second quarter are not provided in the text of this filing; they are referenced as being available in the furnished press release.
Material Changes and Events
The primary material change reported is the amendment to the ProQuest Transaction Agreement dated July 28, 2021.
- Acquisition Timeline Extension: Due to a second request for information from the Federal Trade Commission (FTC), the outside date for completing the ProQuest acquisition was extended from November 8, 2021, to December 31, 2021.
- Further Extension Option: Both Clarivate and the Seller Group retain the option to extend the new outside date to April 29, 2022.
- Financing Implications: The extension impacts the redemption terms of the Convertible Preferred Shares and the senior Notes. The Convertible Preferred Shares may be redeemed by Clarivate if the acquisition is not completed by November 8, 2021, though the Company currently has no intention to redeem them. The Notes must be redeemed if escrow release conditions are not satisfied by November 8, 2021, unless an exchange offer is conducted.
Outlook, Risks, and Management Commentary
Management expects the ProQuest acquisition to be completed within the timetable contemplated by the Amendment (by December 31, 2021, or potentially April 29, 2022). Regarding the $2.0 billion Notes held in escrow, Clarivate anticipates either conducting an exchange offer to align the notes with the new timeline or redeeming the Notes in accordance with their terms if the exchange is not successful.
Key Risks and Contingencies:
- Regulatory Approval: The transaction remains subject to FTC review under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
- Financing Contingency: If the acquisition is not completed by November 8, 2021, the Company may be obligated to redeem the Notes, requiring the use of the bridge facility or other liquidity sources.
- Forward-Looking Statements: The filing includes standard disclaimers regarding uncertainties related to the acquisition, integration, market conditions, and the impact of the COVID-19 pandemic.
Investor Verification Checklist
- Verify the specific Q2 2021 revenue, earnings, and guidance figures in the press release (Exhibit 99.1) and supplemental information (Exhibit 99.2) referenced in this filing.
- Monitor the status of the FTC review and any further regulatory delays that could impact the December 31, 2021, or April 29, 2022, closing dates.
- Assess the Company's liquidity position and the terms of the $2.0 billion bridge facility in the event the Notes redemption is triggered.
- Review the terms of the Amendment to the Transaction Agreement (Exhibit 2.1) for specific conditions regarding the extension options.